Microsoft Weighs In on Google-Yahoo

Microsoft general counsel Brad Smith to testify on online-ad partnership at hearings on both sides of Capitol Hill Tuesday.

By John Eggerton -- Broadcasting & Cable, 7/15/2008 11:28:00 AM

Microsoft, no stranger to the label of “800-Pound Gorilla of the Information Age,” is taking aim at the Google-Yahoo ad-partnership in hearings on both sides of Capitol Hill Tuesday.

According to testimony prepared for hearings in the Senate Judiciary Committee Antitrust Subcommittee and House Judiciary Committee Antitrust Task Force, Microsoft general counsel Brad Smith planned to tell the legislators that the Google-Yahoo deal would give the pair unprecedented control over online advertising, saying that it could do damage to "competition in online advertising and innovation on the Internet."

Smith argued that Google would control up to 90% of all search advertising and that the deal would mean fewer choices for advertisers, "leaving them with no choice but to do business with Google," and would create higher prices for advertisers and make Google the Internet's gatekeeper.

Smith wasn't pulling any punches, saying that the implications for privacy would be dire. "If one company -- Google -- controls up to 90% of online-search advertising, it will have a complete picture of your online activities. If that happens, Congress won’t need to enact a federal privacy policy: We will already have a national privacy policy -- Google’s privacy policy.”

Google defended the deal at the hearing Tuesday, saying it was good for advertisers and consumers and that Google would not control 90% of the search market--Yahoo! maintains it is not giving up its search and is looking to grab more of it from Google.

At the hearing, representatives of Google and Yahoo! also said they would be willing to work with the Justice Department if any competition issues arise out of Justice's review of the deal.