Senator urges DOJ to monitor Google, Yahoo deal

WASHINGTON (AP) -- A key senator is urging the Justice Department to keep up its investigation into the antitrust implications of the Internet advertising partnership that Google Inc. and Yahoo Inc. plan to launch this month.

In a letter Thursday, Wisconsin Democrat Herb Kohl, chairman of the Senate Judiciary antitrust subcommittee, said his panel concluded that "important competition issues are raised by this transaction." He urged the Justice Department to "continue to monitor the state of competition in this industry."

The Justice Department is already examining the deal to decide whether to intervene, and had no comment Thursday beyond reiterating that the review continues.

Under the partnership, Google will sell some of the ads displayed alongside search results on Yahoo's Web site. Because Google's system for identifying and displaying ads is more lucrative than Yahoo's own approach, Yahoo has embraced this link with its rival as an alternative to a takeover by Microsoft Corp.

But several advertisers have raised concerns about the deal, arguing that it will limit competition, raise prices and reduce choices in the online advertising market. Microsoft also has been lobbying the Justice Department to intervene.

Kohl, who expressed concerns about the partnership when it was first disclosed and held a hearing in July, did not take a formal position Thursday on whether the deal should be blocked. But his letter urged the Justice Department to step in to protect competition if it determines that Google is "gaining a dominant market position" because of the agreement.

He added that even if the department concludes that the partnership does not violate antitrust law, it "must be sure that this deal never in the future crosses the line into an unacceptable, anticompetitive collaboration among competitors which will harm consumers and advertisers."

Google and Yahoo have ramped their own campaign to defend the partnership. They insist the deal will benefit consumers and advertisers by enabling both companies to deliver targeted ads that are more relevant to viewers.

"We believe that this arrangement is good for competition and will benefit advertisers, Web site publishers and consumers," Google said in a statement.

Responding to predictions that the deal will further cement Google's grip on the online advertising marketplace, the two companies have also stressed that it will be up to Yahoo to decide when and whether to show an ad from Google's inventory. And they maintain that by driving additional revenue for Yahoo, the partnership will make it a stronger competitor to both Microsoft and Google.

Kohl is not the first member of Congress to weigh in. Last week, a handful of lawmakers from the San Francisco Bay area, where both Google and Yahoo are based, sent a letter to the Justice Department arguing that its intervention "could detrimentally affect the online advertising market and electronic commerce."

And last week, 10 members of the House Judiciary Committee urged the department to examine the deal closely "to ensure that it promotes, and does not hinder competition."

Shares of Google, based in Mountain View, Calif., fell $21.23, or 5.2 percent, to $390.49 Thursday. Shares of Yahoo, based in Sunnyvale, Calif., fell $1.38, or 8.1 percent, to $15.58 Thursday.