Senate Judiciary Subcommittee Asks DOJ to Watch Google/Yahoo Deal

As Congress grapples with a financial mess attributable in part to lack of regulatory oversight, a Senate Judiciary subcommittee is leaving the Google/Yahoo deal to the Justice Department. A letter sent by Senator Herb Kohl, chairman of the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, has asked the Department of Justice to carry on with its inspection of Google’s search ad partnership with Yahoo.

“Even should you conclude at present that this deal is not contrary to antitrust law, the Department must be sure that this deal never in the future crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers,” wrote Kohl in the missive, sent to the Antitrust Division’s Assistant Attorney General Thomas Barnett Thursday.

“If, over time, you determine that Google is gaining a dominant market position as a result of the Google-Yahoo agreement, then we would encourage the Justice Department to intervene to protect competition,” continued Kohl.

Since it held a hearing in July to weigh the deal’s potential impact on the search ad market, the Subcommittee has “conducted a careful review of this transaction,” noted Kohl. The Wisconsin Democrat cited information gathered by the Subcommittee from advertisers, competitors and industry experts, and reiterated antitrust-related complaints voiced by a variety of groups.

Concerns about ad price increases, the survival of Yahoo, and barriers to entry into the search ad market were on his list of reasons to keep an eye on Google. He also suggested there are worries about whether “search and display advertising are interchangeable and substitutable.”

The Senator indicated the Subcommittee’s ability to examine the ad deal — intended to go into effect this month — is hindered without additional proprietary information from Google and Yahoo. “We do not have the benefit of the confidential business information supplied by the companies to the Department nor the economic models necessary to predict consumer and advertiser behavior,” he wrote.

In July, the DOJ confirmed it was “looking at the proposed transaction,” noting the inspection involved questions of competition. The department has not publicly stated whether or not it will pursue a lawsuit; however, it’s been reported that the DOJ hired an outside litigator, Sanford Litvack, to look into Google’s activities.

Since the two firms announced the pact, it has been subject to U.S. Senate and House inspection. In addition to Kohl’s attention to the deal, Republican U.S. Rep. Joe Barton of Texas also publicly voiced worries regarding competition and consumer privacy in relation to the partnership.

A host of advertiser, publisher, and advocacy groups also have expressed concern about the search ad agreement. Despite the barrage of scrutiny, Google CEO Eric Schmidt recently confirmed the company’s plan to implement the deal this month.

Last week, a group of California Democrats — many from the Silicon Valley area where the Google and Yahoo headquarters sit — asked the DOJ not to file suit regarding the partnership.