Analysts Weigh In On GooHoo
Stifel Levin analysts believe that Yahoo's Thursday announcement to team up with Google on Internet advertising could face serious antitrust scrutiny. The companies do not need to obtain advance approval from the government as they would for a merger, but the Justice Department could still move against them if it found the arrangement to be anti-competitive, they said.
Google had already notified the department of a prior experiment with Yahoo, and they have continued to "socialize" the deal, agreeing not to start the partnership until roughly Oct.1, giving Justice time to review it, analysts said. They added that by restricting the deal to the United States and Canada, the parties may be trying to avoid European Union antitrust scrutiny, where regulators have been viewed as more aggressive than DOJ.
Google and Yahoo executives need to do a better job than they have thus far to answer questions about "why the efficiencies of the deal won't ultimately lead advertisers to move to Google, leaving Yahoo without a viable search advertising product and Google as the only search advertising game in town."
Stanford Group analysts also weighed in, saying Justice "should be inclined to clear the deal…but we caution that potential opposition form Microsoft and other influential players has yet to be aired."
"A deal that lets the dominant search provider grow larger is bound to raise concerns on Capitol Hill," they said. "While we do not view DOJ as particularly susceptible to political influence from Congress, we do think the Bush administration’s recent antitrust activity in the tech/media/telecom sector (approving XM-Sirius and Google-DoubleClick, and clearing AT&T-BellSouth without conditions) will increase the noise level on Google-Yahoo."
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Antitrust
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