Some of the nation’s biggest advertisers have come out against a proposed advertising pact between Google and Yahoo! and are calling on antitrust officials to block the deal.
The Association of National Advertisers, which counts Procter & Gamble and General Motors among its 400 members, sent a letter to the Department of Justice last week, saying the deal would “diminish competition” and “potentially raise prices to advertisers.”
The trade group said a Google-Yahoo! tie-up would control 90 percent of the search-advertising market. Google, the dominant player in the field, has about a 70 percent market share, while Yahoo! is a distant second.
The letter marks the first time the major trade group has come out publicly against the deal, although a number of advertisers and agencies have questioned the wisdom of the deal from the start.
The Justice Department started an inquiry into the proposed combo shortly after it was announced in June. Google and Yahoo! agreed to hold off implementing the pact for more than three months during the investigation.
Along with the federal inquiry, several state attorneys general are also scrutinizing the pact.
Microsoft has also lobbied aggressively against the deal, following its failed bid to acquire Yahoo!’s search business earlier this year.
In June, Google and Yahoo! entered into an agreement under which Yahoo! agreed to run some ads sold by Google in exchange for a cut of the revenue.
Yahoo!, which continues to lag Google, said the nonexclusive agreement would help it generate more money from some searches and allow it to remain a player in the competitive space.
Opponents of the deal, however, said it would raise prices for advertisers and result in fewer choices. Both Google and Yahoo! argue advertisers set rates under the auction-driven model of selling search ads.
In response to the trade group’s letter, Yahoo! reiterated its position that the deal would increase competition: “Yahoo! remains steadfast in its belief that this deal – in which prices are determined by advertiser demand-driven auctions, and not by collaboration between Yahoo!
For its part, Google said, “Numerous advertisers have recognized that this agreement will help them better match their ads to users’ interests, and that ad prices will continue to be set by competitive auction.”