ad pact

Google campaigns for the Yahoo deal

September 19, 2008: 12:36 PM ET

By Yi-Wyn Yen

Google says it's misunderstood, and it's stepping up its campaign to set the record straight. This week three of Google's most visible executives aggressively defended the search giant's controversial revenue-sharing agreement with Yahoo through multiple blog posts and a news conference.

Since news leaked that the Department of Justice hired one of the nation's top litigators Sandy Litvack for a possible antitrust case against Google (GOOG) two weeks ago, the search giant has increased its outreach efforts to tell its side of the story.

Google claims there's a lot of misconception about its pact to outsource a portion of Google ads on Yahoo (YHOO). The deal has been under review by the DOJ for the past three months. Google plans to implement its search pact, which would place Google's ads on Yahoo's Web properties, in early October.

There is a growing concern among critics that the deal will allow Google to monopolize search advertising and that having the No. 1 and No. 2 search engines join forces will make the online ad market less competitive. Google's chief economist Hal Varian and North America advertising president Tim Armstrong together posted three blogs this week arguing that this simply isn't true.

Meanwhile Google chief executive Eric Schmidt in a news conference Wednesday blamed archrival Microsoft (MSFT) for masterminding the antitrust scrutiny in the press. "We are quite certain Microsoft is busy helping everyone get upset about things," Schmidt said.

Microsoft spokesperson Jack Evans said the company had no comment on the matter beyond  a congressional testimony made by General Counsel Brad Smith in mid-July.

In an unusual move, a Google exec blasted a report by marketing firm SearchIgnite. Google typically does not comment on third-party studies, but in a blog post Varian rattled off four reasons why the two-month-old report is "flawed" and uses "questionable methodology." The SearchIgnite study concludes that advertisers could expect to pay 22% more on average for keywords on Yahoo if the Google-Yahoo pact goes through.

Beyond that, the top Google brass aren't spinning much new information. On Wednesday, Google put out a two-page press release entitled "The Facts about the Yahoo!-Google Advertising Agreement," which Armstrong repackaged into two posts on Google's public policy blog on Thursday and Friday.

Google execs stress that the ad-sharing partnership is good for online advertising because Yahoo remains an independent company. After months of acquisition talks with Microsoft, Yahoo ran into Google's arms on June 12. Yahoo executives said the Google pact was a better choice and could bring in an extra $800 million in annual revenues.

While Google is actively rallying for the deal, Yahoo has remained silent this week. Yahoo spokeswoman Tracy Schmaler says top Yahoo executive Hilary Schneider talked about the company's commitment to its Google partnership at a Sept. 11 media event.

The big G contends the agreement will ultimately help Yahoo improve its services, but one wonders then why Google is the one doing all the talking this week.

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.