Jerry Yang rushed to Capitol Hill yesterday to calm legislators who are no doubt being force-fed horror stories about the Yahoo-Google (GOOG) search deal. Who is telling legislators these terrifying tales? Do you really have to ask?
WSJ: On Wednesday, Rep. Joe Barton (R., Texas), the ranking Republican on the House Energy and Commerce Committee, sent a letter to the Yahoo CEO expressing his concerns. Rep. Barton asked Mr. Yang to explain how the collaboration won’t “have an anticompetitive impact on the online-search market, including the pricing of online-search advertising.”
Mr. Yang didn’t meet with Rep. Barton Wednesday, though Rep. Barton’s staff said the two are looking to meet soon. Mr. Yang did meet with Sen. Herb Kohl (D., Wis.), who raised questions about the Yahoo-Google pact soon after it was unveiled. In addition to Sen. Kohl, Mr. Yang met with Senate Majority Whip Richard Durbin (D., Ill.), and Rep. Edward Markey (D., Mass), chairman of the House Energy and Commerce Committee’s Telecommunications and Internet Subcommittee…
In his letter to Mr. Yang, Rep. Barton also posed several specific questions about how the venture came about and how search data would be used and stored. Rep. Barton asked Yahoo to identify the data it would provide Google about searches conducted on its Web site. In a statement, Yahoo said, “We structured the agreement with Google so that Yahoo won’t transfer any personally identifiable information to Google without user consent.”
Yahoo and Google are reportedly trying to blunt concerns by claiming that “search” is not a distinct market but just one blurry element of a broader “online advertising” market–and that the Yahoo-Google deal therefore won’t lead to a dominant market share.
This position is ludicrous, of course. Search is a very distinct market, and one player–Google–already has overwhelming share.
That said, we continue to believe that there is no basis other than politics for regulators to block this deal. The market is already a natural monopoly, and it makes sense for Yahoo (and even Microsoft) to take advantage of Google’s superior scale.