Ads That Built Google Could Now Pose Test
Sergey Brin, left, and Larry Page, co-founders of Google, which has proposed an $800 million agreement to provide search ads to Yahoo, a key competitor.
(By Paul Sakuma -- Associated Press)
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Saturday, September 13, 2008
Most people pay little mind to the text ads that surface after an Internet search.
Flowers at 1-800-FLOWERS
Same Day Delivery Available
Your Satisfaction at 1-800-FLOWERS
1800flowers.com
But appearing as they do millions of times daily, such unremarkable quatrains form one of the largest single sources of the $21 billion Internet advertising market in the United States. For Google, the undisputed master of delivering them, those slivers of text are the foundation of a digital empire.
Now that company's dominance in Internet advertising and its proposed agreement to provide some search ads to its nearest competitor, Yahoo, is being closely scrutinized by federal antitrust investigators, according to sources familiar with the Justice Department's thinking.
In what could emerge as the first serious regulatory challenge to the burgeoning Web giant, Justice Department lawyers are asking whether the proposed $800 million alliance with Yahoo will be good for consumers or another step toward a behemoth Internet monopoly.
Google and Yahoo have said since the deal was announced in June that they were confident their arrangement would win the government's blessing.
But over the summer, the department has made moves that suggest the approval is not being treated as a routine matter. In a signal that a formal investigation had opened, The Washington Post reported in July that the department had issued "civil investigative demands" for information to the companies involved. This week, the Wall Street Journal reported that investigators had hired Sandy Litvack, a veteran antitrust attorney, to oversee the review.
"From all outward signs, the department is seriously considering a lawsuit," said M.J. Moltenbrey, a Freshfields Bruckhaus Deringer lawyer who was director of civil nonmerger enforcement in the Justice Department's antitrust division in the 1990s.
Whether the government decides to try to block the deal, moreover, the investigation allows antitrust regulators the opportunity to probe the records and interview the customers of the world's most dominant Web company. Maybe they won't find anything. But as Microsoft, the similarly dominant player in PC software, learned in the 1990s, one investigation can lead to another.
