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Google CEO: Yahoo Wedding Is On

Google CEO Eric Schmidt says his company's ad pact with Yahoo is on track, despite concerns raised by regulators and Microsoft.

Google search engine

The European Union in July launched its own investigation regarding potential antitrust issues and the effect the Google/Yahoo deal could have on the European Economic Area market.

Schmidt told reporters Wednesday that he thinks that the company does not need specific U.S. government approval, and that any delay will cause the search engines to lose money in advertising revenue. Schmidt also said he expects that the plan will be implemented around October 11.

The controversy surrounding the deal stems from Google's disclosure in June that it inked a non-exclusive advertising agreement providing Yahoo with access to Google's AdSense program for search and AdSense for content advertising programs on Yahoo's U.S. and Canadian Web properties.

At the time, Google said that it had been in contact with regulators about the arrangement, and said "we expect to work closely with them to answer their questions about the transaction. Ultimately we believe that the efficiencies of this agreement will help preserve competition," said Omid Kordestani, senior vice president, Global Sales and Business Development, on Google's blog.

Kordestani said that that the company believes that the deal would be good for competition, and pointed out that Google provides "similar services to sites like AOL and Ask.com as well as many other partners."

"The truth is, this kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition," he said. "Toyota sells its hybrid technology to General Motors, even though they are the number one and number two car manufacturers globally. Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users."

Schmidt told reporters that that U.S. government regulators are doing a "proper job" in looking into the Google/Yahoo deal, and said that Google has already answered questions from regulators, Reuters reported.

In addition to explaining the regulatory inquiry to reporters, Schmidt blamed fierce rival Microsoft for stirring the pot.

"We are quite certain that Microsoft is busy helping everyone get upset about these things," said Schmidt according to Reuters, referring to the spurned company's thwarted plans to acquire Yahoo earlier this year.

Overseas, several other consortiums have also jumped into the fray. The Paris-based World Association of Newspapers (WAN) released a lengthy piece citing reasons why the Google/Yahoo deal should be axed.

WAN said that most of its 18,000 newspaper title members are regular customers of Google, and to a lesser extent, Yahoo. The group said that the publishers depend on Google and Yahoo for a "significant" portion of their online advertising revenue and rely on each company's respective search engines (both their paid search ads and their natural search results) to drive traffic to their Web sites."

The organization said that the competition between the two search companies has provided a "necessary check" to any potential market abuses, and has helped to ensure that publishers and content generators are capable of earning an equitable and fair return on their content.

"In our view, the proposed advertising deal between Google and Yahoo would seriously weaken [that] competition, resulting in less revenues and higher prices for our members. W.A.N. is also concerned that this deal would give Google unwarranted market power over important segments of online advertising."

In a Google blog post written Thursday, Tim Armstrong, president, Advertising and Commerce, North America, tried to allay anti-competition worries and said that the Google/Yahoo agreement will not raise ad prices. He said that neither Google nor Yahoo set ad prices, but that they are priced by an auction when an advertiser bids only on "what an ad is worth to them."

"Ad price is only one part of the story," said Armstrong. "A more important measure for advertisers large and small is the return on investment of their advertising dollar. The Google-Yahoo agreement will help advertisers convert more clicks into customers by showing more relevant ads on Yahoo!, giving advertisers a better return for every dollar they invest."

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