Several members of the California delegation of the U.S. House of Representatives have warned the Department of Justice and EU regulators that blocking the proposed advertising deal between Google and Yahoo ! could have a detrimental effect on the online advertising market.
According to the Wall Street Journal, the California representatives sent a letter to the DOJ late last week detailing their concerns regarding the possibility that the DOJ could block the deal, which they felt “could detrimentally effect the online advertising market and electronic commerce.” The state representatives claimed such deals were “standard among internet companies” and a block from the DOJ, along with the threat of additional scrutiny may “chill future agreements.”
Earlier this month the Association of National Advertisers voiced its own concerns about the partnership claiming it would, “likely diminish competition." Executive VP of Yahoo !, Hilary Schneider, replied to the letter assuring them the deal was going to do no such thing and Yahoo !’s intention was to use the deal to invest more in its own business.
"This is exactly the opposite of our business goals in pursuing this agreement," Schneider said. "The sponsored search connection to Google should ultimately shrink, not grow, over time — because we are focused on growing our own business, NOT Google’s,” she added.
The advertising deal has been under the microscope since it was announce before the summer. Despite the controversy, Google has said it will go ahead with the deal as planned, in October. CEO Eric Schmidt not only said that the deal was designed to meet government standards but hinted that the drama surrounding the antitrust investigation stems from Microsoft, which is apparently “busy helping everyone get upset about these things.”
We’d be interested to see whether or not the opinions of the California representatives will be enough to sway the Department of Justice. The letter was sent Friday and signed by 11 of the 53 California members of the House of Representatives.