Yahoo frightened away from Google by antitrust concerns
Any potential broadening of an advertising pact with Google likely posed a threat of pervasive antitrust investigations by the Department of Justice.
We can imagine Microsoft working the DoJ regulators from the sidelines like Bobby Knight in a March Madness tilt, if Yahoo and Google tightened up the search advertising market. Google’s dominant position in the high 60 percent range for the US search market, coupled with Yahoo’s addition, likely meant three-quarters or more of search advertising running through the duo.
Reuters said Yahoo got a case of the heebie-jeebies early on, even before Microsoft came calling with its late-January takeover bid. We noted with interest the revelation that ex-Yahoo CEO Terry Semel said no to a $40 per share offer in January 2007.
The day before Steve Ballmer opened the gambit for Yahoo, Jerry Yang and company gave Google the brush-off regarding a possible search ad endeavor:
Bracing for employee questions over whether Yahoo should outsource its search-ad sales to Google, executives were prepared to argue that any short-term gains would derail Yahoo’s long-term push to become a “must buy” for advertisers.
“Short-term analysis of the revenue potential of outsourcing monetization may not take into account the longer term impact on the competitive market if search becomes an effective monopoly,” an excerpt from the company document said. Monetization refers to sales of search-related ads.
Yahoo suddenly found Google much more appealing, as Yahoo’s stock price tanked and Microsoft swooped in with an offer. Yahoo’s rejection of a Google deal will be a point of interest in its many shareholder lawsuits over the failed Microsoft deal.
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