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Google Kills Yahoo Ad Deal
mytrip writes "Google has pulled the plug on on a search-ad partnership with Yahoo that would have given Yahoo major new revenue but that raised antitrust concerns. 'After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement,' said David Drummond, Google's chief legal officer in a blog post Wednesday."
I'm not a huge Google booster, you won't see much more than spamtrap stuff in any of my Gmail accounts; but I don't really understand why this deal is seen as so serious. Yahoo has a fairly strong set of web properties, but mediocre advertising and search. Running Google ads sure isn't a long term vote of confidence in their own ad department; but Yahoo's ad space is quite valuable, and presumably they believe that they can do better as a site operator selling ad space. I'm not sure whether they are right or not; but it is at least plausible.
Am I missing something about this, or did the deal get shot down by some sort of outside pressure? (Is MS still involved in some corporate version of "It's complicated" here?)
Outside pressure is unlikely -- though TFA mentions the association of national advertisers wrote the DOJ a letter, here's how it works:
There's an index called Herfindahl-Hirschmann, where the percentage of the market share for all companies in the market (here, they probably ran it for advertising and search) is squared. If the sum of the squares is above 1700, the DOJ *automatically* threatens/files an antitrust suit.
Hopefully that's semi-clear. It's part of basic microeconomics if you need a better explanation.
There are two very interesting things about Google pulling out:
1) Google is now big enough to attract serious government anti-trust attention. It just immensely harder for them to do anything big that would benefit their core business (advertising) or anything external where they could throw their weight around. The message from the government seems to be that they're going to start treating Google as a de-facto monopoly in search/advertising, which means they're going to try to keep Google from using that monopoly in other markets.* I don't think they're the kind of market threat that the government makes them out to be, but left unchecked they may get there one day soon.
2) Yahoo is fucked. Yang should have sold it to Microsoft when he had the chance; they're probably not going to be able to stand on their own now, and whoever ends up being their suitor won't pay nearly as much as MS's best offer.
* Not that the DoJ is particularly effective here. See: Microsoft
I really dig microeconomics, if you can't tell.
Technically speaking, Google's an oligopolist rather than a monopolist. Oligopoly is a market in which a few large firms control a market with a high concentration ratio (the Herfindahl-Hirschmann Index I mentioned above) and high barriers to entry (in this case, the R&D and advertising that would be required to compete).
Consider the barriers in terms of the fact that Microsoft, with all its money and brand recognition, can't compete with Google in search or advertising. That's partly an issue of quality (real or perceived), as we geeks know, but it does make clear that it's not a "hit and run" (contestable) market where many small firms can jump in and compete.
It's a good thing my government are protecting my right to competing internet search engines; Google has a very special place in society now given their success and they have a social duty--an obligation if you will--to provide society with quick and effective searches. A monopoly at this point would be bad for society, even though a new search engine could always spring up, it would hurt us too much in the short-term and be anathema to our right to access to Google's search servers. We've made people at Google filthy rich, and if they make things too difficult to us we should go as far as to even spread the wealth around.
The DoJ isn't partial or biased. They are 'doing their job' by ensuring that a 'threatening' (note the quotes) monopoly doesn't form. In either case, on the flip side, they represent a tiny form of government regulation in a free capitalistic market - so whether you're a Microsoft-hater or a Google-brownnoser, try looking at the real issue here.
Google was about to enter a deal with Yahoo that may have caused a monopoly of sorts (and infested the place with IFRAMEs, how can you not hate IFRAMEs?). The DoJ said they were worried about it. Google pulled out. End of. They saved money instead of waiting for the court case and going through years of appeals and spending millions/billions.
Always proofread carefully to see if you any words out.
There are very convincing arguments indicating Microsoft may never have intended to buy Yahoo:
In it, it appears that Yahoo is a loss-loss acquisition for Microsoft. It further appear very unlikely that a Microsoft acquisition can be accepted by antitrust authorities.
In that article, Microsoft have so far obtained the first part of what they aimed for; changing the board to a Microsoft friendly board, now comes step two which is not buying yahoo but making a deal to get access to the '361 patent', which the now short term focused board likely will accept to salvage their investment - notice many of those who bought into Yahoo due to the Microsoft deal are closer to day traders than investors... They will sell out Yahoo for quick cash then abandon the company.
It should be "Google kills Yahoo".
Not M$ who first ruined their stock by proxy, then whispered 'antitrust' long enough into the appropriate ears so Google had to cease supporting Yahoo.
Patents Drive Free Software as Hurricanes Drive Construction Industry
see http://www.washingtonpost.com/wp-dyn/content/article/2008/11/06/AR2008110600027.html
Yahoo is fine, if they are given time by their shareholders. And a new leader. Yahoo has failed to innovate significantly in years. For example, I know I started using Yahoo Maps in the late nineties. By 2005 it was exactly the same, but now Google Maps was on the scene and had the cool ajax interface, satellite imagery overlays, and other cool stuff. Yahoo started rolling that stuff out like, last year.
They do have an extended userbase, and there is value in that, but they are right back where they found their stock price 8 years ago for a reason--a failure to innovate in an industry that values effective innovation over all things. I mean, it takes them several years to copy what Google did years ago...new management is needed (but not MS! that would be a disaster for both companies).
expandfairuse.org
It could just be because of the "Google is not evil" thing. They want to maintain that image. They are doing the responsible thing and promoting competition in the market. Any company that is big enough to run amock in anti-trust law is probably also greedy enough to go ahead with the deal. When the DOJ comes knocking they'll just take the ass pounding in court for a few years until the DOJ runs low on funds and drops it. In the meantime the company is still making far more profit as a result of the deal than they are paying out in legal fees.
Of course, another strong possibility is that Microsoft is pointing fingers. It wouldn't be the first time. Ballmer wants to fucking kill Google. *ducks*
I heard a yahoo radio ad yesterday. It was promoting Yahoo's safer search results compared to Google because they've teamed with McAfee anti virus and spam.
I was slightly surprised as I can't recall the last time I heard the "Yahooooo". Let alone hear anyone suggest that McAfee is good.
thats what exactly it is. microsoft has been way too chummy with neocons in the last 8 years, who were staffing up DOJ with their own supporters only. remember, in a senate hearing a hag admitted that she has screened the DOJ applicants FORTY times for their political views, 'by mistake'.
when microsoft bids failed, and microsoft chose not to go for a hostile takeover to prevent damaging its public image, for some reason doj started looking into the google-yahoo deal out of 'concerns of anti trust'. how convenient, how timely, what a coincidence.
if there is anyone still having doubts, i would like to remind them how microsoft bribed innumerable officials in various countries in the standards case, and how many scandals erupted as a result.
microsoft is not above anything, it seems.
Read radical news here
Here is a link to the '361 patent the above poster mentioned,and reading it one could see why MSFT might covet it. That said,I always thought MSFT going after yahoo search was just to throw everyone off what they really wanted,which I think is Yahoo mail. While I personally think Yahoo search is a LOT better than Google,thanks to the "more" tab which will give you relevant queries connected to the original search,I just can't believe MSFT would pay that much for it. And they know that buying outright will probably get them smacked with antitrust.
But if you look at the data you'll see that Yahoo is the largest webmail provider,followed by MSFT with Hotmail. Not only would buying Yahoo Mail give MSFT the lead in webmail,but all those emails are a goldmine for data mining,which I'm sure MSFT can capitalize on. That would also give them a lot more eyeballs for their ads,cross promotions,etc while giving MSFT a boost against Google at the same time in the search arena,sine I have noticed many users check their email and then begin searching for their topics from the searchbox at the top of the webmail page.
Personally I hope that MSFT buys it and has enough sense to leave the search and Webmail alone. Because Hotmail and Live search really REALLY suck and I'm quite happy with my Yahoo Mail and Yahoo Search,thank you very much. But knowing MSFT they'll turn it into "Super Live Search 2.0 with the new Vista Look!" and then I'll have to find a new webmail provider. Because as someone who often has to go to areas where there is only dialup I can say that IMHO Gmail sucks the big wet titty when you are on a low bandwidth connection. Their "loading the entire series of emails as one long chat session" really slows it to a crawl. And I like my email folders dammit!
ACs don't waste your time replying, your posts are never seen by me.
The only duty google has is to please it's shareholders, if you were to 'redistribute' the wealth of large companies that annoy you like you say, well that isn't exactly encouraging for people to try to form successful companies is it, what with them putting in the work and collectively everyone else getting the profit.
Just to clarify something, Google has a duty to it's consumers as well. The two consumer groups it has are:
1) Searchers. This is the obvious one, but what's less obvious is that they aren't paying money direct to google, so they aren't directly a source of revenue. However, we do "pay" with our eyeballs as we see Google ads on their search engine. It's their duty to make sure as many eyeballs are on those ads, but at the same time don't piss us off so much that we go somewhere else for search content because ads are choking the results. Their duty is to keep us searching as much as possible because that helps with their primary source of revenue.
2) Ad buyers. Less obvious to the average joe, but of course their primary source of revenue. Would yahoo be a good thing for these ad buyers, or would the decrease in competition increase prices and reduce choice? It's their duty to ad buyers as consumers to provide a good product, and a duty to the market place to not act like a monopoly or stifle real competition.
The shareholders don't care about these things, they are just about getting more money. However, as one of those "obama liberals" who wants to "spread the wealth," I want to do so by maintaining and encouraging competition, and reminding everyone that we should be looking out for the consumer, not share holders.
Companies that put shareholders first and consumers second should not be tolerated. Companies that put consumers first often find that the shareholders are taken care of in the bargain.
"All great wisdom is contained in .signature files"
To me this looks like Google pulled Yahoo away from MS and then dropped them. It goes to show how big corporations really are. Also, blaming MS is pointless as they're doing the very thing as those who lobby against MS OS monopoly should have been doing. Obviously MS got the idea from somewhere else as their strength is not creativity. Google gave this up too easily and that partially revealed their hand. It only indicates they wanted to slay Yahoo just the same as Microsoft, but in the guise of being "friendly" in order to woo the open source and anti-monopoly (i.e. MS) crowd. Focusing this just on MS and making Google the hero is a big mistake. The bottom-line here is money, and the loot (which is Yahoo), and NOT the health of the industry.
Google and Microsoft are the same in my book. Though some would argue Google is worse in this case because they're better at playing nice, then ripping their guts at the last minute. They put up a really good image, it's very shiny and looks very open and accepting, but an image is all that it is. Under that facade is another very ambitious company, and they only need/want one thing and that is money. Taking Yahoo out of the picture just makes their pockets fatter. Even better for them if Yahoo is dead, scavenged and gone.
So my point is Google just played the part in this one, but dropped it when the fight got tough. For company like Google to drop it so easy makes it so blatantly obvious. They're just going through motions.
Google is getting increasingly influential over how the world gets access to media. There's an analysis here about how the beta launch of the Chrome browser generated 450,000 independent blogs over the course of 60 days. Google Chrome is also the top sponsored link for searches on "browser" or "web browser." On the organic search side, Google Chrome ranks near the top on Google Search, Google Blog search, and Google news.
http://is.gd/6mJk
MS pulled some strings at the DOJ to make sure they paid extra special attention to this deal in hopes of what just happened. It's Microsoft's style (unethical business practice).