The Google-Yahoo ad agreement is at great risk of being blocked by antitrust authorities because of a very serious "tip of the iceberg" problem.
- Google and Yahoo continue to publicly frame the issue as only what is above-the-surface in plain-sight -- i.e. the proposed ad agreement -- or what I describe as the 'tip of the iceberg.'
- Unfortunately for the companies, skilled and dutiful antitrust investigators look deep beneath the surface for the 90% that is hidden and secret -- the true relationship and incentives between Google and Yahoo -- or what I describe as the rest of the iceberg.
- The reason why the public and press may be surprised if the DOJ challenges the Google-Yahoo ad partnership, is that very few have bothered to dive in and look beneath the surface of this ad agreement to what it means for the overall relationship between Google and Yahoo.
There are sound reasons our judicial system requires that parties/witnesses testify under oath to tell the truth, the whole truth, and nothing but the truth.
- I don't question if Google and Yahoo are telling "the truth" about what the agreement says, because DOJ investigators can read.
- What I question is if they have told the public 'the whole truth and nothing but the truth.'
- That's why DOJ has subpoena power and deposition authority to compel testimony under oath -- because what matters under the law is "the truth, the whole truth and nothing but the truth."
Just because Google and Yahoo only want the DOJ to review the ad agreement and nothing else -- simply doesn't matter. The DOJ is obligated to enforce the law as written, i.e. the full "restraint of trade' provision of Section I of the Sherman Antitrust Act.
- "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."
As you can see, the proposed ad agreement may constitute a "contract" under the statute, which is 'the tip of the iceberg.'
- As you can also see, the DOJ is obligated to investigate 'the rest of the iceberg,' to determine if the broader relationship between Google and Yahoo constitutes a "combination in the form of a a trust or otherwise, or a conspiracy..."
- This is important, because the press, bloggers and investors appear to be assuming that if they can't see problems beneath the surface -- the problems must not exist.
Clearly, the companies are very worried about prospects for approval. Only recently have the companies created webpages to tell their side of the story. Why didn't they do this in June?
- Yahoo's President Sue Decker finally presents a public defense in her post "Myth-busting and the Yahoo!-Google agreement."
- Google has a new site Google Yahoo Facts which also presents their case for approval.
Bottom line: The old adage "there's more than meets the eye" is very true here.
What matters to antitrust authorities and the Sherman Antitrust Act is preserving competition and policing anti-competitive behavior.
- Antitrust authorities are not going to be naively led around by the nose in a company tour of the tip of the iceberg -- i.e. their public ad agreement.
- The DOJ will do its job and investigate deep beneath the surface to ensure that their is nothing anti-competitive in the new co-dependent relationship between the #1 and #2 competitors in a highly concentrated search advertising market.
The facts and the law will determine the outcome of this case, not conventional wisdom.
