Google (NSDQ: GOOG) is trying hard to explain what this Yahoo (NSDQ: YHOO) deal isn't, mainly to allay any regulatory fears, among other fears, and Omid Kordestani, SVP of Global Sales and Business Development, wrote about it in a blog post:
-- "This is not a merger. Rather, we are merely providing access to our advertising technology to Yahoo! through our AdSense program.
-- This does not remove a competitor from the playing field. Yahoo! will remain in the business of search and content advertising, which gives the company a continued incentive to keep improving and innovating. Even during this agreement, Yahoo! can use our technology as much or as little as it chooses.
-- This does not prevent Yahoo! from making similar arrangements with others. This arrangement is not exclusive, meaning that Yahoo! could enter into similar arrangements with other companies.
-- This does not increase Google's share of search traffic. Yahoo! will continue to run its own search engine and advertising programs, and the agreement will not increase Google's share of search traffic.
-- This does not let Google raise prices for advertisers. Google does not set the prices manually for ads; rather, advertisers themselves determine prices through an ongoing competitive auction. We have found over years of research that an auction is by far the most efficient way to price search advertising and have no intention of changing that."
Then, a bit of a counter-intuitive reasoning on why this would foster more competition:" The truth is, this kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition. Toyota sells its hybrid technology to General Motors, even though they are the number one and number two car manufacturers globally. Canon provides laser printer engines for HP, despite also competing in the broader laser printer market. Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users."
By Rafat Ali