Yahoo-Google Deal Supported By Silicon Valley Lawmakers
Altogether, 11 members of the U.S. House of Representatives expressed support of the pending deal by denouncing a proposed block, the Wall Street Journal reported.
Anna Eshoo, Zoe Lofgren and Mike Honda, lawmakers all representing the Silicon Valley area, claimed that Congressional impediments to the deal would ultimately hurt technological innovation and competition in the marketplace.
The barrage of recent support follows after 10 members of the U.S. House of Representative Committee on the Judiciary issued a letter last week to the Justice Department, expressing strong concerns about the agreement and encouraging a thorough review process, the Journal reported.
The Justice Department is currently reviewing the deal and is expected to announce a decision whether to go to court to block the deal by early October.
Altogether, the proposed agreement would enable Sunnyvale-based Yahoo to run ads supplied by Google alongside Yahoo's search results and on some of its Web properties in the U.S. and Canada. In addition, the agreement also gives Yahoo the ability to display paid search results from other third parties as well as the search engine's own Panama marketplace. Both search engine giants would then share profits generated by the ads.
Under the terms of the agreement, Yahoo said it will select the search term queries and the pages on which it intends to offer Google paid search results. The company also maintains it will determine the number and placement of the results provided by Google and the mix of paid results provided by Panama.
Yahoo said that the deal would enhance its ability to compete in the converging search and display marketplace and anticipated that the agreement will generate approximately $800 million in annual revenue, with an estimated $250 to $450 million in incremental operating cash flow in the first 12 months.
However, since it was signed in June, the Google-Yahoo deal has elicited intense criticism from lawmakers and advertisers alike who contend that it would give too much power to Google and diminish freemarket competition. Earlier this month, the Association of National Advertisers, a trade group representing numerous international corporations, maintained in a statement that the deal would be harmful for advertisers and recommended that it be blocked by Congress.
Yahoo president Susan Decker defended the deal in a corporate blog, maintaining that contentions that "the agreement gives Google 90 percent control of advertising" were "just plain wrong."
"It's simply a contract that gives Yahoo! the right, but no obligation, to show Google AdSense ads on Yahoo!'s own network," said Becker, adding that the reason the company structured the deal that way -- as opposed to an exclusive deal that defined revenue commitments to Yahoo along with traffic quotas to Google, "was precisely to avoid the issues the critics are raising," she wrote.
Those critics, she wrote, "clearly don't understand the deal and what it means for Yahoo, Google, advertisers and users."