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September 9, 2008 1:43 PM
Posted by Benjamin J. Romano
Antitrust scrutiny of the Google-Yahoo search advertising deal is heating up. The Wall Street Journal reported online Monday afternoon that the Department of Justice has hired a top-notch litigator, possibly in preparation for an antitrust battle with the Internet search giant.
In June, Yahoo declared that its negotiations with Microsoft were over and that it was entering a search-advertising pact with Google. The companies "voluntarily agreed to delay implementation for up to 3 1/2 months while the U.S. Department of Justice reviews the arrangement," Yahoo stated at the time.
According to the Journal, the hiring of Sanford Litvack "is the strongest signal yet that the U.S. is preparing to take court action against Google and its search-advertising deal with Yahoo Inc. The two companies combined would account for more than 80% of U.S. online-search ads."
Here's a one-page CV on Litvack (PDF).
The story cites "lawyers close to the [DOJ] review," who said the agency has been collecting evidence on Google and the deal. Litvack's role would be "to examine the evidence gathered so far and to build a case if the decision is made to proceed."
Yahoo and Google made statements to the Journal reiterating their belief that the deal is lawful and that the hiring of an outside consultant is normal.
On Aug. 28, Bloomberg News asked Google CEO Eric Schmidt when he expected to hear back from Justice on the deal and whether he was "willing to move forward even if you do not get it?"
Schmidt's reply, according to a transcript of the interview:
"Well, in fact we are going to move forward with it. In the middle of June we announced a deal and we had talked with the government -- and we want to work with the government because we understand that they have a proper role here to review it -- and we suggested a three and a half month hiatus before we turn the deal on. So we are currently planning to turn it on at the end of September, early October right in there and that work is under way. I can tell you that we are in the process of talking to the government which is well established. And they have not indicated one way or the other on how they will deal with us. Which is fine."
The Bloomberg interviewer, talking with Schmidt at the Democratic National Convention, went on to ask about a broader perception that "you are simply too big, too powerful, Google needs to be reigned in somehow."
Schmidt: "... Google is not the kind of powerful player that, for example, Microsoft was when it went through what it did in the 1990's."
Bloomberg: "Microsoft might dispute you on that."
Schmidt: "Well, but I have the facts. The fact is that in Microsoft's case you could not switch and in Google's case you can switch with one click. So we're very sensitive to making sure that end users have choices. And indeed, we make a very strong commitment to our users that we will not track your data. So if you, a Google user, become dissatisfied with us, for any reason, we make it easy for you to switch to any of our competitors, and there are quite a few good ones. We think that is the right answer in a competitive market. So I completely disagree with any characterization of a similarity or any other kinds of analogies. There is every reason to believe that information is power, but there is also reason to believe that there are many other sources of information. No one has a unique lock on that, nor should they."
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