WASHINGTON - An online advertising partnership between Yahoo Inc. and Google Inc. is facing opposition from consumer and civic groups that didn't wait for an official deal announcement to voice their discontent.
Top Google executives said Thursday they are interested in a partnership with their closest rival but didn't indicate how close they were to an agreement.
A coalition of 16 civil rights and rural advocacy groups, including the Black Leadership Forum and the League of Rural Voters, on Friday urged federal regulators to investigate the potential combination.
The Black Leadership Forum is an umbrella group of 36 civil rights organizations, including the NAACP and the National Urban League.
The groups argued in a letter to Assistant Attorney General Thomas Barnett, head of the U.S. Justice Department's antitrust division, that the deal would give Google almost 90 per cent of the search advertising market and strengthen its influence over Internet users' access to information.
Separately, the Center for Digital Democracy, a consumer advocacy group, said it will push U.S. regulators to block any deal and is already urging European consumer groups to raise concerns with European Union officials. The EU generally takes a tougher approach on antitrust, fining Microsoft Corp. $1.3 billion for anti-competitive conduct earlier this year.
"You can't allow Google to operate a portion of its leading competitor out of its back pocket," said Jeffrey Chester, executive director of CDD.
While previous attempts to block deals by both the CDD and civil rights organizations have proved unsuccessful, their opposition won't be the only hurdle to a Google-Yahoo partnership.
The Justice Department has already made inquiries about an ad partnership test the two had for two weeks last month. And, Senator Herb Kohl (D-Wis.), who chairs a subcommittee overseeing antitrust issues, said last month he would closely scrutinize any permanent deal.
Officials from Yahoo and Google declined to comment on the groups' letter. But Google executives said Thursday they would seek to address regulators' objections.
"If there were a deal (with Yahoo), we would anticipate structuring the deal to address the antitrust concerns that have been widely discussed," said Google Chairman Eric Schmidt.
Although Schmidt wouldn't detail such a structure, analysts have speculated that it would operate the partnership as an auction-style system that would allow other rivals, including Microsoft, to show ads on Yahoo.
The two companies first began discussing a partnership as an alternative to Microsoft's efforts to purchase Yahoo, which fell apart last weekend.
The civil rights groups noted in their letter that Google has about 70 per cent of the search advertising market, and Yahoo 20 per cent.
"Historically, mega-corporate mergers nearly always negatively impact the black community," Gary Flowers, executive director of the Black Leadership Forum. Reducing competition on the Internet would "limit new business opportunities on the Internet for African Americans."
Search engines are "the primary portal into the Internet" and direct "hundreds of millions of online users to ... the most relevant information, news, entertainment, education and e-commerce," the groups wrote.
Keith Bolin, president of the American Corn Growers' Association, said his group signed onto the letter because its members don't like monopolies. The group was involved in an antitrust lawsuit against Monsanto Co. a year ago, he said.
