Yahoo and Google's advertising partnership announced in June is a big deal, in fact the promise that it would increase Yahoo revenues was one reason used in defending against Microsoft's proposed takeover. Now that proposed partnership is increasingly under attack.
The Justice Department reportedly hired Sanford Litvack, a prominent anti-trust litigator to consult on its probe into Googleand Yahoo'splanned deal, a sign the government could be preparing to challenge the deal as anti-competitive. Litvack has quite the resume: he was the DOJ's antitrust chief under Jimmy Carter and Disney's former Vice Chairman. Most recently he was a partner at the law firm Hogan & Hartson, where he focused on antitrust and trade regulation cases, among other things. The DOJ won't comment on whether or not Litvack is now on their team, but he's now longer on Hogan & Hartson's website, and he's reportedly been asked to examine evidence on the Yahoo-Google deal.
That's not all, news of Litvack's hire follows a powerful advertising industry trade group coming out against the Yahoo Google deal. The Association of National Advertisers, which represents marketing powerhouses like General Motors, P&G, and Wal-Mart, is appealing to the Justice Department to block this deal. I spoke to the president of the ANA, Bob Liocide, who pointed to the fact that a combined Yahoo-Google would influence over 90 percent of the search advertising market, which poses real concern to prices. Liodice says there's simply too great a risk that this deal would reduce competition and lead to higher prices and a lower return on investment to advertisers. This risk of course comes at a time when thanks to economic pressures, advertisers are pulling back their spend, and focusing much more on return on investment.