John Paczkowski

Recent Posts by John Paczkowski

DOJ Token Joins Hat, Dog, Shoe in Googolopoly

“Good for competition.” That’s how Omid Kordestani, Google’s (GOOG) senior VP of Global Sales and Business Development, described the advertising deal it struck last month with Yahoo (YHOO). “Why did we make this agreement?” he asked. “Quite simply, we think it is good for users, advertisers and publishers. By offering Google’s industry-leading technology to Yahoo, the whole system becomes more efficient, and everyone benefits.”

A reassuring profession of altruism, but one that the Justice Department isn’t buying. The agency has opened a formal antitrust investigation into the deal and will soon begin issuing civil investigative demands to the companies’ competitors, customers and potential partners in the hopes of determining whether it will further tighten Google’s near-monopoly grip on the search advertising market. “This is a complicated situation, but one of the key questions is very simple,” said David Balto, an antitrust lawyer who was competition policy director at the Federal Trade Commission during the Clinton administration. “What is Yahoo’s incentive to continue to compete?”

Good question.

Helpfully, Google and Yahoo have already agreed to delay implementing their new alliance for three and a half months so the DOJ can answer it.