The Association of National Advertisers, which includes big marketers like GM (GM), Procter & Gamble (PG), and Wal-Mart (WMT), argues that Google (GOOG) should not be allowed to sell advertising for Yahoo! (YHOO)
The ANA’s position has the benefit of being right, even if Microsoft (MSFT) agrees with it.
According to The Wall Street Journal, the trade group "is concerned that the deal could raise the price of search advertising."
Of course Google will use its market position to raise rates. Between them, Google and Yahoo! (YHOO) control about 85% of the US search business. The entire motivation of the partnership is to show that Yahoo! can do well as a standalone company. That argument would hardly be helped if the revenue Google brings in is measly.
There is no legitimate claim that the Google/Yahoo! tie-up is not a monopoly. The companies may get away with it by saying that only a part of Yahoo!’s inventory will be put into the pool of advertising being sold. But, Google would be silly not to get as much money as it can for that inventory along with its own. Google’s stock has suffered from the perception that its margins are falling. Over the last three months Yahoo!’s stock may be down 30%, but Google’s has 20% as well.
The advantages that Google will have under the deal with Yahoo! are not much different from the advantages enjoyed by Microsoft or the old AT&T. Shareholders expect the deal to be a huge success. For that to happen, national advertisers have to take their lumps on pricing.
Douglas A. McIntyre
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