The Justice Department: Google (GOOG) Looks Like Microsoft (MSFT)

The Association of National Advertisers has already indicated to the Justice Department that it is bitter about the planned link-up which would allow Google (GOOG) to sell part of Yahoo!’s (YHOO) search inventory. The ANA argues that since the two companies have about 85% of the US search market between them, they will use their partnership to raise rates. The logic has the benefit of making sense. Firms do not form alliances to lose money.

The ANA carries a lot of wood. Its membership includes big marketers like GM (GM) and Wal-Mart (WMT). Now it appears that the association is not alone in its concerns.

As it turns out, Google was probably best off not to mention a deal with Yahoo! at all. It may have helped raise the larger issue of whether Google is already throwing its weight around too much. It would be a shame if the Justice Department began to look at Google the way that Teddy Roosevelt looked at Standard Oil.

Google’s lack of subtlety may be its undoing. According to The Wall Street Journal "The Justice Department has quietly hired one of the nation’s best-known litigators, former Walt Disney Co. vice chairman Sanford Litvack, for a possible antitrust challenge to Google Inc.’s growing power in advertising."

So, Justice may end up spending years with a search warrant going through the Google mansion looking for evidence.

At $419, Google is already near a 52-week low, down from a period high of over $747. If the investigation moves beyond the Yahoo! tie-up, the shares could easily head below $350.

Douglas A. McIntyre