Pia Sarkar
SAN FRANCISCO -- As criticism continues to mount over a search advertising tie-in between Yahoo!(YHOO Quote - Cramer on YHOO - Stock Picks) and Google(GOOG Quote - Cramer on GOOG - Stock Picks), the two companies are ratcheting up their defenses to ensure that the deal goes through.
In a recent post on Yahoo!'s corporate blog titled, "Myth-busting and the Yahoo!-Google agreement," President Sue Decker offered a lengthy explanation of how the company's decision to outsource some of its online ads in the U.S. and Canada to Google wouldn't hurt advertisers, as some have feared. Google has gone even further, creating an entire site that addresses the criticisms point by point, and quotes various advertisers and marketers supporting the deal. It plans to move ahead with the search arrangement on Oct. 11. Nonetheless, many in the industry still need more convincing. Several groups have already voiced their opposition to the deal, including the Association of National Advertisers, the World Association of Newspapers, the World Federation of Advertisers and the International Advertising Association. Their main concerns are over Google's current dominance in the search business, which could be further cemented from a partnership with Yahoo!. Advertisers also worry that ad prices will shoot up in the absence of competition. The U.S. Department of Justice and the European Commission are closely scrutinizing the arrangement, although it isn't clear if either of them will challenge it. Several state attorneys general also are looking into it. Yahoo! and Google use a similar model but different algorithms for determining prices for search ads on their sites. Advertisers bid on keywords through a competitive auction. Ads are then ranked on the search page based on the highest bids as well as quality scores.
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