Top 5 Myths About Yahoo


The Yahoo-Google Partnership Would've Been a Monopoly

Yahoo and Google make a lot of money selling online advertising. Much of that advertising appears alongside search results. Both companies use online bidding systems that allow advertisers to set a fair market price for each search keyword ("beer" or "T-shirts," for example). Google's bidding system is called AdWords and Yahoo's service is called Panama.

In June 2008, Google and Yahoo announced a limited partnership that would allow Yahoo! to use Google's AdWords technology to display certain ads on Yahoo! brand Web sites. Google already has similar arrangements with AOL and [source: Kordestani]. Under the non-exclusive arrangement, Yahoo would choose the specific keywords that would be handled by Google [source: Shankland].

The U.S. Department of Justice (DOJ) waved its antitrust flag immediately. After all, Google and Yahoo are the top two search engines, controlling more than 90 percent of the search market share. The Department of Justice indicated that it would fight any deal that denied consumers the "benefits of competition," namely lower prices and better service [source: Helft].

In reality, the partnership wouldn't have constituted a monopoly or negatively affected prices. Since both sites use bidding to set their prices, their alliance wouldn't have changed under this limited arrangement. More likely, the very prospect of two players of this magnitude playing together was enough to spook the DOJ and convince Google to drop the deal.

It probably wouldn't surprise you to learn that one the biggest opponents of the deal was Microsoft. Equally not surprising is the fact that one of the greatest opponents of Microsoft's aborted purchase of Yahoo a few months earlier was Google [sources: Keane and Drummond].