Ad body opposes Google-Yahoo alliance

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A trade association representing many of the biggest consumer advertisers in the US on Sunday came out against a controversial search advertising alliance between Yahoo and Google.

The intervention by the Association of National Advertisers, made in a complaint to US anti-trust regulators, represents the first broad attack on the alliance, which was announced in May.

The deal with Google played a central role in Yahoo’s successful effort to fend off Microsoft’s takeover advances earlier this year. Staying independent and trying to boost its search revenues by outsourcing part of the advertising to Google would yield more for shareholders than an outright acquisition at the price Microsoft was suggesting, Yahoo’s board decided.

Although the alliance does not need official antitrust clearance, the two companies said they would delay implementing it for 100 days to allow the Department of Justice to study it. The voluntary delay was designed to reduce the risk that regulators would decide later on to challenge the relationship, which links the two biggest search advertising companies, as anti-competitive.

The ANA now written to the justice department with a list of objections to the partnership, according to a statement posted on the association’s website yesterday.

While it did not release the full text, the ANA said that its letter ”notes that a Google-Yahoo partnership will control 90 per cent of search advertising inventory and states ANA’s concerns that the partnership will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising”.

While some individual advertisers have hinted publicly at their own concerns, the trade association’s letter represents the first broad attack on the deal from a highly influential group of consumer companies.

The ANA’s board includes representatives from giant advertisers like General Motors, Wal-Mart and Anheuser-Busch. Bob Liodice, ANA’s president, said the submission to anti-trust regulators had been made after an analysis that included ”input from the board’s members”, as well as discussion with Google and Yahoo.

Yahoo said on Sunday it was “disappointed with the ANA board’s position”. It said prices would be determined by advertiser demand-driven auctions, and the deal would help drive a “more robust” marketplace for Yahoo’s advertisers.

Google could not immediately be reached for comment.

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