Yahoo’s Promises v. Yahoo’s Reality: Congress Finally Gets It

Congress is finally understanding the reality of the Yahoo-Google search deal, and what it means for the state of search competition in general. It's not about price fixing advertising rates, it's about neutering the second place market participant. As I wrote on September 27, the current deal between Yahoo and Google will inevitably lead to the decline of Yahoo's core search advertising business. They will insert Google ads to push revenue. But as they do so, they'll give advertisers an increasing incentive to just go to Google for their ad management. The disparity between Yahoo and Google's revenue-per-ad models will grow, which will further encourage Yahoo's reliance on Google. The result will be a Google monopoly in search advertising. And instead of competing for that monopoly, they get paid for the privilege: