Google and Yahoo Postpone Tie-Up Launch, Advertisers Grow Wary

07 October 2008

WASHINGTON, DC: Yahoo and Google will delay the launch of their search advertising alliance while the Department of Justice continues to investigate the deal. Meanwhile, some top adland figures have expressed concerns about the power Google could wield if the search giants get their way.

When the tie-up was originally announced in June, the two companies said they would not initiate the agreement until October, allowing time for all possible implications to be fully examined.

However, as the Justice Department investigation is still in progress, the online duo have agreed to extend the delay while discussions continue.

One major concern among advertisers regarding the plan is that Google could increasingly come to dominate the search market, and possibly be able to raise prices, despite the fact its uses an "auction system" for search space.

Rob Norman, chief executive of GroupM Interaction Worldwide, argues: "Over time, Yahoo will seek to outsource more and more of its stuff to Google, and this will mean the eventual atrophy of Yahoo."

Bob Liodice, chief executive of the Association of National Advertisers, adds: "Google and Yahoo claim these are auctions. Many of our marketers don't necessarily believe that these are real auctions."

The ANA opposes the deal, and Liodice said that only one member of its board – which includes the likes of Procter & Gamble, McDonald's and Wal-Mart – was "uncertain" about this position.

By contrast, David Kenny, the managing partner of Publicis's digital and media arm VivaKi, more positiviely opines: “What I like about this deal is that it makes Yahoo more viable.” 

"We absolutely want competition. But we are also pretty clear with Google that we want their algorithms to be more transparent." 

Google's chief executive, Eric Schmidt has previously stated that the deal would benefit internet users, and "was designed precisely to meet the terms of antitrust law in the US."

Data sourced from Wall Street Journal/New York Times; additional content by WARC staff