When Microsoft CEO Steve Ballmer dropped his bid to buy Yahoo, he took pains to point out that Yahoo's search-sharing arrangements with Google were likely to bring intense antitrust scrutiny for any company acquiring Yahoo. Given Microsoft's lengthy history with antitrust enforcement, Ballmer found that particularly unappealing.
This week, his prediction started to come true. Rep. Joe Barton (R-Tex.), the ranking Republican on the House Energy and Commerce Committee, sent a letter to Yahoo CEO Jerry Yang expressing concern over "how this collaboration will impact competition" in online search.
Barton noted that, according to the latest comScore results, Google accounts for 60 percent of online searches, followed by Yahoo at 20 percent. Microsoft trails distantly at a mere nine percent.
Concern About Data Collection
Barton referred to a Department of Justice guideline on collaborations among competitors, which notes that even though collaborations may be intended to benefit competition, "they may in practice reduce competition."
"I am also concerned about how the relationship between Google and Yahoo will affect the collection, storage, and use of data relating to an individual's online activity," Barton said. He added that between Google's acquisition of DoubleClick and Yahoo's purchase of advertising exchange RightMedia and ad network Blue Lithium, both companies are collecting "a great deal of data about people's online activity and behavior." The collaboration thus raises the "potential for the data to be shared or merged, and perhaps used by Google and Yahoo" in ways consumers don't understand.
Barton posed eight detailed questions to Yang, including which company made the first move in forming the collaboration, how Yahoo will determine which search queries will be routed to Google, how Yahoo arrived at its estimate that the deal will generate $800 million in revenue for Yahoo, how Yang figures that the collaboration will not have an anticompetitive effect, what investments Yahoo plans to make to improve its services, and more.
The letter specifically asks for details on what information Yahoo will provide Google, including IP addresses, logs and cookie data. It also inquires as to whether Google or Yahoo will be "dropping cookies" on users when they click a Google ad served on Yahoo pages.
The letter also inquires about statements apparently made by Yahoo executives expressing concern that a Google-Yahoo collaboration would be viewed as a monopoly in search. Evidence of those statements came out in a shareholder suit against Yahoo filed in Delaware. Barton wants to know which executives made those statements and how the concerns were addressed.
In a conference call announcing the deal, Yang discounted antitrust concerns but said the deal would not be implemented for about three months to allow the Department of Justice to investigate.
Meanwhile, Ballmer outlined Microsoft's search plans now that the Yahoo deal is apparently behind him. "There are some things that we just have to, as we say, ante up to be in the game: relevance, cap-ex, responsiveness," he told the Financial Times. "There are areas in which we're going to differentiate and make Google play catch-up. And then there are areas in which we're trying to change the rules."