The deal to make Microsoft the exclusive search provider for Yahoo received much attention around these parts (as nearly everything surrounding Microsoft does) but according to a report on CNET, by consolidating the lucrative search/online advertising market from three to two major players, the deal might not pass Justice Department muster as is:
In this case, the Justice Department is likely looking at two different aspects of the deal. On one hand, regulators are expected to probe whether advertisers will be harmed by the loss of an outlet for their ad dollars, as well as whether Google has less incentive to compete for searchers now that there’s only two fish in the pond. … “This deal is going to eliminate a competitor in search in a market that has high barriers to entry and only has three players,” [antitrust lawyer Matthew] Cantor said. He compared it to the reaction that would have arisen in the 1960s if two of the three major television networks had decided to merge amid a far-smaller media landscape.
[…] Cantor thinks the Justice Department will force Microsoft and Yahoo to put Yahoo’s search technology assets up for auction to let the deal go through. That would allow a third major player to enter the business, although that new entrant would still have the burden of attracting searchers: Yahoo has said that an overwhelming majority of the people using Yahoo search are already doing so from a Yahoo Web page, the combination of which are among the most visited pages on the Internet.
However, that might not be as appealing to Microsoft and would at least throw the deal into question. The company has spent millions on the development and launch of Bing, but it likely is interested in retaining certain aspects of Yahoo’s search technology, not to mention some of its engineers.
It’s interesting that with all the focus in the Seattle Times about Google’s supposedly crushing monopoly, little has been written about the anti-competitive aspects of Microsoft’s own search initiative. Huh. Good thing, at least, there’s plenty of competition in the tech news and analysis business.