Yahoo-Google Search Deal in the Crosshairs for Antitrust in the US

July 15th, 2008 at 12:00 am

antitrust movie poster

When Yahoo and Microsoft failed to reach a deal on a buyout, Yahoo did the seemingly unthinkable, outsource their search engine to Google .  It’s like the 1996 Apple-Microsoft tie up.

This partnership all boils down to giving Google the already dominant player in the Search market a boost while wiping out the 2nd most dominant player, Yahoo.  Before the deal, the search market pie had Google at 65%, Yahoo at about 25% and Microsoft below 10%.  Now with the Google-Yahoo tie-up, Google is taking a share of about 70% and yahoo about 20%.  The remaining crumbs of the pie are shared by Microsoft, and Ask, and all the other search engines.

However, this formidable alliance between Google and Yahoo is under the legal microscope.  States Attorney Generals are "looking in to" the Yahoo-Google deal and some are even already investigating for antitrust violations.

Like all antitrust cases, a single dominant player in the market is questioned and charged with monopoly and all sorts of unfair market practices.  Attorney Generals from several states are looking into the allegations.  Florida, Arkansas and Connecticut are included on the list and are already issuing subpoenas.

Google, in an e-mail response to CNET News, said: "Just as we are continuing to have cooperative discussions with the Department of Justice about this arrangement, we voluntarily reached out to state attorneys general to explain the deal when we first announced it. We continue to have discussions with them about the agreement. We are confident that the arrangement is beneficial to competition, but we are not going to discuss the details of the regulatory process." [CNET]

Yahoo has not said anything yet but sources say that they are cooperating and claiming innocence.