Objections hit Google/Yahoo ad deal

The proposed advertising tie-up between search giants Google and Yahoo as been a dealt a blow after a leading advertising industry group lodged an objection.

The Association of National Advertisers (ANA), a US advertising industry body, has registered its concerns about the deal to regulators.

In a letter to assistant attorney general Thomas Barnett, the ANA claimed that "a Google/Yahoo partnership will control 90 per cent of search advertising inventory."

The partnership "will likely diminish competition, increase concentration of market power, limit choices currently available and potentially raise prices to advertisers for high quality, affordable search advertising," the statement said.

Yahoo "remains steadfast in its belief that this deal - in which prices are determined by advertiser demand-driven auctions, not by collaboration between Yahoo and Google - will strengthen Yahoo's competitive position...and will help to drive a more robust, higher quality...marketplace for our advertisers," the company said in a statement on Sunday.

Google spokesman Adam Kovacevich said "numerous advertisers have recognised that this agreement will help them better match their ads to users' interests, and that ad prices will continue to be set by competitive auction."

"While some have raised questions about the agreements' potential impact on ad prices, advertisers care far more about getting a good return on their advertising dollar than they do about buying cheap ads that don't bring in customers, and this agreement will clearly help advertisers reach Yahoo users more efficiently," Kovacevich said.

Yahoo struck the agreement in June with Google, the world's dominant supplier of web search services, as it sought to shore up its advertising business and ward off pressure to merge from Microsoft.

The two companies said at the time that they were not required to get regulatory approval before implementing the deal, but had voluntarily delayed it for up to three-and-a-half months, while anti-trust regulators review the arrangement.

The non-exclusive deal covers the US and Canada but not other markets.

Under the deal, Google would supply Yahoo with advertising services to run alongside Yahoo's own web search system.

Several US states are also are reviewing the proposed pact, including Florida attorney general Bill McCollum.

Google could not be immediately reached for comment. Google has said it expects to carry out the Yahoo deal next month.