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Microsoft questions Google's plan to save the world through ads

Mr. Smith's boo-hoo over Goo-Hoo

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Yes, Microsoft turned up at today's dueling Congressional hearings on the Google ad pact with Yahoo!.

Redmond senior vice president and general counsel Brad Smith told both the Senate Judiciary Committee Subcommittee on Antitrust and the House Judiciary Committee Antitrust Task Force that Goo-Hoo! is one bad idea.

"The effect of this agreement would be to further entrench the control of the dominant supplier of search advertising and, in the process, reduce choice and innovation and increase prices," Smith said in his prepared testimony. "We believe the Google/Yahoo! agreement raises some very serious concerns and may very well be illegal under the antitrust laws."

When he last testified before Congress, Smith said much the same thing about Google's DoubleClick acquisition. But this time he acknowledged that such statements are a tad hollow when coming from Microsoft.

"I am fully aware that the presence of Microsoft at this hearing must strike some as ironic, given our own antitrust history," he said. He's also aware that Microsoft is a Google competitor, with its own interest in Yahoo!. For those of you who've equipped your browser's with Icahn blockers, Redmond is still very interested in swallowing Jerry Yang and company - or at least their search business.

But the Google monopoly could very well outstrip its Microsoft predecessor. And if we need Redmond to keep Mountain View in check, so be it.

Last month, as a way of fending off Microsoft's Yahoo! merger bid, Google told the world it would provide ads for Jerry Yang's search engine in the US and Canada. But the deal is still awaiting approval from regulators. Mr. Smith rightly points out that the pact would give Google power over roughly 90 per cent of all search ads sold in the US.

"If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it," he said. "Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium. Not in television, not in radio, not in publishing. It should not happen on the Internet."

Of course, Google chief legal officer David Drummond was also on Capitol Hill today to resume his tete-a-tete with Counselor Smith. And naturally, he argued that Goo-Hoo! would improve the universe.

"While there are other threats to the continued competitiveness of the Internet, the online advertising marketplace is competitive, robust and dynamic," he said. "Our recent advertising agreement with Yahoo! will maintain and expand that competition, while growing the reach of consumers' favorite instant messaging chat programs.

"The non-exclusive commercial arrangement creates new efficiencies that make the pie larger, benefiting users, advertisers and publishers, while protecting privacy and spurring innovation."

Our favorite bit: Drummond says that thanks to the Goo-Hoo tie-up, "consumers will...get better, more interesting ads." Just what we all wanted. ®

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