Microsoft-Yahoo deal approval still uncertain
The Justice Department has asked Microsoft and Yahoo for more documents relating to their proposed search deal. It’s being seen as an indication the anti-trust investigation could be more substantial than expected.
Both firms note they are cooperating fully, and Microsoft says it is not surprised by a comprehensive investigation. However, the requests for more detail could make it less likely the deal will be approved and made operational by the target of early next year.
A former Justice Department antitrust official told Bloomberg that officials would take a skeptical approach to any suggestion that effectively becoming a bigger search company was necessary to compete in the market. However, he predicted that if Microsoft and Yahoo could persuade them that the deal wouldn’t harm competition, it should get the thumbs up.
The investigators are likely to examine whether the deal increases the incentive for the individual search sites to compete. They’ll also want to predict how the partnership will influence the amounts advertisers pay through the respective bidding processes.
The proposed deal would see Bing powering the results on all Yahoo search sites, with Yahoo taking control of premium search-related ads, while Microsoft takes over other search results. Yahoo would retain 88 percent of the revenue from ads on its own search pages and receive $150 million from Microsoft to cover “transition” costs.
Ironically the deal might never have been proposed were it not for the Justice Department. Microsoft’s first choice of a search partner was Google, but that idea was quashed by officials indicating they would not approve such a partnership.
Microsoft officials are already familiar with their Justice Department counterparts. Earlier this year the firm agreed to an extension of an “oversight” process that began in 2002 as part of a settlement in an antitrust case. The department will continue to monitor Microsoft’s actions in sharing technical information about Windows with developers until 2011.
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