Spanish ban on advertising on public TV (10/08/2009)
WFA research shows insight into global audience measurement (31/07/2009)
Contagious: "The rise of own brands" (31/07/2009)
Bing to power Yahoo! as part of global search deal (31/07/2009)
BRICs well-placed for economic recovery (28/07/2009)
FT reports "[receding] Google/Yahoo! alliance hopes"
Date: 02/11/2008
To read WFA's response to the proposed Google/Yahoo! partnership, click here.
________________________________________
Source: Financial Times (November 2, 2008)
The stalled advertising partnership between Yahoo and Google faces the latest in a lengthening series of deadlines this week, with the chances looking increasingly slim that the two internet companies will go ahead with the alliance. Failure of the partnership has grown more likely as the companies have struggled to resolve long-running talks with the US Department of Justice about its potentially anticompetitive effects. The alliance was agreed in June as part of Yahoo's defence against an unsolicited bid from Microsoft, but has run into opposition from industry associations for both advertisers and newspaper groups, which object to a link of the two biggest search advertising companies.
If it falls through, Yahoo would lose the best option for boosting its performance in the short-term, making it likely it will have to turn to other strategic options, according to analysts. Youssef Squali, an analyst at Jefferies in New York said: "A Microsoft search deal would be the next best option".
The internet companies said they would not implement the partnership until a month ago to give antitrust regulators time to review it. The informal deadline has been extended twice since, with the latest set for later this week. The internet companies were not ready to concede defeat over the weekend, and said that talks with the justice department would continue. One person close to the situation conceded the chances for the alliance had faded, and that finding a compromise that suited all sides looked increasingly unlikely.
The situation was still "fluid" the person added.
The partnership, which would involve Yahoo displaying some adverts supplied by Google alongside results from its own search engine, would link the companies, with combined market share put at more than 80 per cent. The companies have argued that the arm's length nature of the non-exclusive deal, with Yahoo deciding whether and when to use Google adverts, would ensure that they still had strong incentives to remain competitors.
Justice department lawyers have not yet signalled whether they intend to sue to block the partnership, or whether they would clear it if it included more limits to protect competition. However, any concessions made to antitrust regulators would require the internet companies to sign a consent decree with the justice department, which would then have to monitor future compliance, subjecting Google to a degree of direct regulatory oversight for the first time.
Mr Squali said: "Google doesn't need the headache".
Mark Mahaney, an analyst at Citigroup, said the financial impact to Google from losing the partnership would not be significant, although failure to win over the regulators could have other implications. It was another sign that Google had become too large and it would be harder to make other strategic moves without stirring up scrutiny from regulators, he added. Yahoo, by contrast, has pinned its short-term hopes for boosting its financial performance on the alliance, and has counted on the deal to persuade Wall Street that it has alternatives to a tie-up with Microsoft. If it fails, it will add to pressure on Yahoo to agree an acquisition of Time Warner's AOL arm, a deal that has also been under discussion and which represents one of Yahoo's few remaining options, according to analysts.
Mr Mahaney said: "It makes the AOL deal more likely".
By Richard Waters in San Francisco
____________________
WFA Members can request more information on this issue from Robert Dreblow at [email protected]
