| By Maureen O'Sullivan |
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| November 5, 2008 11:54 AM EST |
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The Justice Department made it crystal clear this morning that if Google hadn’t abandoned its controversial ad deal with Yahoo the companies would have found themselves in court.
The agency put out a statement from the head of its antitrust unit Thomas Barnett saying that Yahoo and Google “abandoned their advertising agreement after the Department of Justice informed the companies that it would file an antitrust lawsuit to block the implementation of the agreement.” 
And he explained why the agency had decided to sue: “If implemented, the agreement between these two companies accounting for 90% or more of each relevant market would likely harm competition in the markets for Internet search advertising and Internet search syndication.
Barnett also said that “The arrangement likely would have denied consumers the benefits of competition – lower prices, better service and greater innovation.”
After months of investigation, he said the DOJ “concluded that Google and Yahoo! would have become collaborators rather than competitors for a significant portion of their search advertising businesses, materially reducing important competitive rivalry between the two companies. Although the companies proposed various modifications to their original agreement in an effort to address the Department’s antitrust concerns, the Department determined that such modifications would not eliminate the competition concerns raised by the agreement.”
The investigation ultimately included the Canadian Competition Bureau and attorneys general from 15 states including California, Connecticut, Delaware, Florida, Hawaii, Iowa, Maryland, Massachusetts, Michigan, Missouri, New Hampshire, New York, Texas, Wisconsin and Washington.
The DOJ imagines that if the deal went through Yahoo’s competition to Google “likely would have been blunted immediately with respect to the search pages that Yahoo chose to fill with ads sold by Google rather than its own ads, and Yahoo would have had significantly reduced incentives to invest in areas of its search advertising business where outsourcing ads to Google made financial sense for Yahoo.”
Maureen O'Sullivan is a UK-based lecturer
in Law (Property and New Technologies), University of West of England, and President of the Free Software
Consortium Foundation. She is coordinator of the Cyber Tribunal and Legal Governing
Body, FSC.
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