November 5, 2008
Yahoo! Inc. and Google Inc. have abandoned their proposed advertising
agreement after the Department of Justice informed the companies that
it would file an antitrust lawsuit to block the implementation of the
agreement.
The Department said that, if implemented, the agreement between these two companies accounting for 90 percent or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication.
"The companies' decision to abandon their agreement eliminates the competitive concerns identified during our investigation and eliminates the need to file an enforcement action," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "The arrangement likely would have denied consumers the benefits of competition -- lower prices, better service and greater innovation."
The agreement would have enabled Yahoo! to replace a significant portion of its own Internet search results advertisements with search results advertisements sold by Google.
After an extensive investigation that was facilitated by the companies' cooperation and agreement to provide the Department time to investigate prior to implementation, the Department concluded that Google and Yahoo! would have become collaborators rather than competitors for a significant portion of their search advertising businesses, materially reducing important competitive rivalry between the two companies.
Although the companies proposed various modifications to their original agreement in an effort to address the Department's antitrust concerns, the Department determined that such modifications would not eliminate the competition concerns raised by the agreement.
The Justice Department said it cooperated extensively with the Canadian Competition Bureau throughout the course of their investigations. Attorneys General from 15 states -- California, Connecticut, Delaware, Florida, Hawaii, Iowa, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New York, Texas, Wisconsin, and Washington -- also participated in the investigation.
