Google, Microsoft and Yahoo lawyers yesterday answered lawmakers' questions about the effect Yahoo's deal to outsource some of its search to Google will have on the search ad market. Microsoft's top lawyer, Brad Smith, said the deal will eliminate Yahoo as a competitor from the market and drive up prices for advertisers. He told lawmakers Yahoo CEO Jerry Yang admitted as much to Microsoft representatives in a June 8 meeting in San Jose.
(Yang) said 'If we do this deal with Google, Yahoo will become part of Google's pole and Microsoft,' he said, 'would not be strong enough in this market to remain a pole of its own.
Yahoo general counsel Michael Callahan disputed Smith's retelling of the meeting. Google's top lawyer, David Drummond, told lawmakers that "Google and Yahoo will remain fierce competitors. This agreement will not remove a competitor from the field."
Advertisers disagree with Drummond. Ad buyers have told us that the Yahoo-Google deal will likely drive the prices they pay for search ads up by 25 percent. Yesterday, Matthew Crowley, the chief marketing officer of AT&T subsidiary Yellowpages.com, echoed the sentiment.
If [the Google Yahoo search deal] is allowed to happen, it seems obvious that some advertisers will have a diminishing ability to play Google and Yahoo against one another in a competitive marketplace. The result would be less choice and higher prices for advertisers — especially smaller-scale advertisers that do not have the heft or resources to ensure the best deal possible. The agreement poses a significant danger not only to competition for internet search advertising and to the broader internet economy, but to Yahoo's continued viability as a strong independent competitor.
BoomTown's Kara Swisher caught up with each company's legal man in D.C. in the video embedded up top. Our favorite part: Googler David Drummond's slick-as-Vaseline false modesty over Google's prospects in the brand advertising market, around the 1:30 mark.