US govt. looking at Google/Yahoo, MS may walk

US govt. looking at Google/Yahoo, MS may walk

Category

Google Adsense

Yahoo's Google AdSense trial has drawn an early investigation by

the US Justice Department, a source reportedly tells Reuters. The government agency has allegedly begun determining whether or not the two-week-old web ad experiment will violate US antitrust laws by providing too much of a monopoly to Google for web ads. An unconfirmed call from Google's chief executive Eric Schmidt prompted the investigation, according to the insider.

The Justice Department wouldn't confirm its hunt for information, though both Google and Yahoo explain that a government search would be unexpected as the search engine developers "proactively" warned officials about the test before it began, according to spokespeople from the two companies.

Yahoo is widely recognized as having started the test as part of a "poison pill" strategy to dissuade Microsoft from forcing through its estimated $44 billion takeover attempt. By using Google AdSense for at least a small portion of its ad searches, Yahoo will have hoped to improve its finances and make the Microsoft bid unattractive or unnecessary to shareholders. Yahoo recently beat financial expectations for the first quarter of 2008 and considers this ammunition against Microsoft claims that Yahoo is vulnerable to a weak economy.

Microsoft CEO Steve Ballmer has meanwhile said that his company will consider backing away from its proposed takeover of Yahoo if unable to make progress in a reasonable amount of time. He contends that Microsoft is committed to its existing bid but that the company can't afford to wait indefinitely for acceptance.

"If it doesn't [work], we go forward," Ballmer says. "Time is money."

The Redmond, Washington-based company has said it may start a proxy war as early as Saturday. The move would attempt to push a deal by garnering enough support from shareholders to vote in a takeover-friendly board of directors at Yahoo, allowing Microsoft an expanded influence on web ads and search that it hopes will rival Google.

http://www.electronista.com/articles/08/04/24/justice.looks.google.yahoo/