An AAI Statement: The Collapse of the Google-Yahoo! Transaction

11/6/2008

Under pressure from the Department of Justice's (DOJ) Antitrust Division, Google has announced that it will not pursue its proposed search engine advertising transaction with Yahoo!.  The transaction was the subject of an American Antitrust Institute (AAI) White Paper which concluded that the publically available information suggested that the transaction was likely anticompetitive and also a violation of the U.S. antitrust laws.  At the same time, the AAI believed the anticompetitive aspects of the transaction may be fixable if the DOJ and the parties could negotiate a number of specified conditions that would preserve Yahoo!'s ability to remain an independent search engine and source of advertising in the dynamic internet market.

It appears that the DOJ agreed with the essence of the AAI's conclusions; but that the DOJ, Google, and Yahoo! could not work out a mutually acceptable solution.  The AAI applauds the DOJ for taking a strong position against a deal that could have had serious anticompetitive results.

The AAI believes the public is well-served by having a minimum of three substantial, independent, and competitive platforms in the rapidly evolving market of search engine advertising.  Going forward, the AAI hopes the DOJ recognizes the need for vigilance toward efforts by either of the two search engines firms - Google or Microsoft - to take over or otherwise reduce Yahoo!'s independence.

Read the AAI White Paper