EU to probe Google and Yahoo! ad deal

16 Sep 2008

The European Commission is to launch an investigation into the proposed advertising tie-up deal between two of the internet’s biggest players, Google and Yahoo!

Competition Commissioner Neelie Kroes has begun a preliminary investigation into the agreement’s potential effects on competition within the European Economic Area.

The Commission said it is unsure if the alliance will pose a problem or not.

If the deal goes ahead it means Google would be able to answer queries made through Yahoo! and match them with the right ads and both companies would split the revenues gained.

Both Yahoo! and Google say the deal is limited to their web properties in the US and Canada and does not cover Europe.

The Commission only has jurisdiction to investigate the arrangement if it affects trade between EU member states.

Last week both companies said they intended to press ahead of the deal regardless of anti-trust issues.

Google chief executive, Eric Schmidt, stressed that both companies volunteered the platform to regulatory scrutiny and they are confident they Department of Justice will grant its assent.

However, adding to both companies woes, the World Association of Newspapers has waded into the argument and has asked both the European Commission and US Department of Justice to block the deal on anti-competitive grounds.

The group, which represents 18,000 newspapers around the world, argues that the deal will give Google unwarranted power.

It last week registered its opposition with the Department of Justice claiming the partnership will influence 90pc of search advertising inventory.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years