RealTime IT News

DoJ Intensifies Google-Yahoo Scrutiny

Google-Yahoo

As the DOJ appears to be intensifying its antitrust review of Google's advertising deal with rival Yahoo, analysts wonder if the companies might find themselves defending the partnership in court.

The DoJ's antitrust division has retained Sandy Litvack, one of the most prominent antitrust attorneys in the country, to advise its review as it determines whether or not to take legal action to block the ad deal, according to a report in The Wall Street Journal.

On another regulatory front, Google (NASDAQ: GOOG) today announced that it has taken the notable step of cutting in half the amount of time it holds IP addresses on its server logs, reducing the retention period from 18 months to nine. That move came in response to increased scrutiny from European and U.S. policymakers and regulators about the privacy implications of Web giants such as Google collecting and storing massive amounts of information about their users.

On the surface, the two issues are unrelated: The DoJ's review is focused on the antitrust issues relating to the deal with Yahoo (NASDAQ: YHOO), which would take effect only in the United States and Canada, while the privacy concerns, largely the voice of a European Union advisory group, apply to all Internet companies that collect users' data.

But that hasn't stopped one of the deal's most vocal opponents, Microsoft (NASDAQ: MSFT), from trying to introduce privacy into the antitrust review. At a Senate hearing on Internet privacy earlier this summer, Mike Hintze, Microsoft's associate general counsel, warned, "We definitely see a nexus between competition and privacy, in that if there does become a dominant player in the online advertising space, that means there is a single company that is collecting more data."

Through the partnership, Google would serve a portion of the ads that appear on Yahoo's search results pages. Critics charge that an alliance of the two largest players would turn the search-advertising market into a monopoly, driving up prices and diminishing competition.

The DoJ opened a formal antitrust review of the deal in June, just days after it was announced. They did not need regulatory approval, but Google and Yahoo voluntarily put the deal on hold to accommodate a review.

Next page: Competitive threat?