Yahoo Plans Internal Review, Google Tie-up Under Scrutiny

29 September 2008

SUNNYVALE, California: Ailing search pioneer Yahoo has hired consultants Bain & Co to help "streamline" its operations, resulting in rumours of redundancies. Meanwhile, whispers in Washington suggest the US government may challenge its proposed search advertising tie-up with Google.

Discussing the latest in a long line of internal reorganisation efforts, a memo to staff from Yahoo chief executive Jerry Yang (pictured) defined the review as part of the company's plan to boost its online advertising income.

Yang's communiqué opines: "I know that Yahoo can benefit greatly from more discipline among all departments and functions, across the company. Longer term, getting fit now will enable us to be more successful moving forward."

Colin Gillis, an analyst at Canaccord Adams, argues  that "a 10% reduction in headcount is not unreasonable" if Yahoo is to boost its level of revenue-per-employee. 

  • Representatives of the Justice Department are also set to meet with Yahoo and Google this week, having already spoken to the search companies' rivals and customers about their proposed link up.

    Ten members of Congress wrote to the Justice Department last week stating the importance of conducting a detailed review, the outcome of which is forecast for October.

    Replying to Representative Steve Chabot, one of the letter's signatories, David Hantman, Yahoo's vp of global public policy, said the deal would "in no way result in one company controlling 90% of any part of the online advertising market."

    "In fact, since our plan and intent is to increase our search advertising share over time – not cede any of it to Google – this deal will make us a stronger competitor in search and display advertising."

    The Justice Department has, however, apparently hired ex-Walt Disney vice chairman Sanford Litvack to review the evidence and build a case, if necessary, with the Canadian authorities enlisting antitrust expert David Kent for the same purpose.

  • Data sourced from Wall Street Journal; additional content by WARC staff