Tuesday, February 23, 2010

U.S., EC Clear Agreement Between Microsoft and Yahoo!

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Microsoft Corporation and Yahoo! Inc. announced on February 18 that they would begin implementing their proposed search agreement, after receiving clearance from the Department of Justice Antitrust Division and the European Commission (EC).

In an announcement the same day, the Antitrust Division said it had closed its investigation into proposed Internet search and paid search advertising agreement between the companies without taking action. The EC also issued a statement that it had concluded that the deal would not significantly impede effective competition in Europe.

Yahoo!’s algorithmic and paid search platforms will be transitioned to Microsoft, under the parties' proposal. Yahoo! will become the exclusive relationship sales force for both companies’ premium search advertisers globally.

According to the parties' statement, “the companies’ unified search marketplace will deliver improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for web publishers.”

Competition with Google

Both the Antitrust Division and the EC suggested that the transaction would allow Microsoft/Yahoo! to compete more effectively with Google.

“The proposed transaction will combine the back-end search and paid search advertising technology of both parties,” the Antitrust Division explained in its statement. “U.S. market participants express support for the transaction and believe that combining the parties' technology would be likely to increase competition by creating a more viable competitive alternative to Google, the firm that now dominates these markets.”

The transaction “is not likely to harm the users of Internet search, paid search advertisers, Internet publishers, or distributors of search and paid search advertising technology,” in the government's view.

According to the parties, the transaction was also cleared by regulators in Australia, Brazil, and Canada.

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