Following Microsoft’s failed bid to buy Yahoo!, a deal is underway for Google to gain control over Yahoo’s search advertising. Presumably this means that Google adwords will spread to Yahoo! increasing coverage while removing choice. With Google taking over 90% of the internet advertising revenue, this would certainly impact on Microsoft’s Live Search wallets, but could wipe out existing smaller search engines and any future competition Google could ever have.

It would also affect smaller businesses in terms of getting a competitive deal on online advertising as the choices would be removed, prices could go up, the smaller voices would be muffled, and advertisers would have nowhere else to turn.

Yahoo! anticipates additional revenue from the deal, presumably Google will do too (else why make the deal) and all this extra cash is coming from somewhere.

Microsoft is making noises, they’ve been in court for similar practices with Micrsoft Windows Monopoly and now they want their own back. There are talks from their corner of price-fixing similar to the UK’s big supermarket agreements where minimum prices are set further hitting the smaller businesses. Microsoft’s best move now would be to file an antitrust lawsuit through the US Justice Department as happened to them prior to 2002 when the case was settled.

As there’s no merger, the Google Yahoo! partnership (hereafter known as Goohoo!) would not need to go through the US Justice dept. but they can challenge the agreement if it’s shown that competition would be stifled.

Goohoo! have agreed to give the deal a 2 1/2 month for the dust to settle and to back out if Yahoo! is ever bought. (Perhaps a collaborative effort to push Microsoft towards a higher bid?) They also deny any claims of potential price fixing and minimum ad costs.

Good idea? Bad idea? Your views and comments are welcome: