Google-Yahoo deal possible
Google believes a partnership with search rival Yahoo would not pose problems with regulators, according to a source close to the company.
Although any move by Google to purchase Yahoo outright would likely face opposition over competition concerns, a non-exclusive business arrangement remains a distinct possibility.
A deal with Google could allow Yahoo to retain its independence, which is under threat from a potential hostile bid from Microsoft, after Yahoo rejected a bid valuing them at $42 billion.
As it explores all possible avenues, Yahoo has recently completed a trial of Google’s propreitary ad-serving system, which it ran in conjunction with its own search results. The Google ad system could prove to be more profitable for Yahoo than their own system; making the company more viable in the long-term.
The United States Justice Dept. is currently speaking to the two firms about any anti-competitive issues that might be raised by an eventual deal.
According to Google, a partnership that fell short of an outright merger would be similar to arrangements already in place with companies such as InterActiveCorp and Time Warner AOL.
Google has also reiterated previous claims that a Microsoft takeover of Yahoo would be damaging to the search market, and raise more competition issues than a limited Google/Yahoo deal - a position with which Aaron Edlin, a specialist in anti-trust law at the University of California agrees.
“The general rule would be that if the arrangement substantially limits competition in some aspect of their business, that would be problematic,” explained Edlin.
“Collaboration that comes short of merger is much more apt to pass muster before anti-trust authorities,”
The results of Yahoo’s test of the Google ad system have not been announced, and last week Yahoo President Susan Decker said current speculation on which route the company might take was “premature”.
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