Why the Google-Yahoo Ad Deal Is Nothing to Fear
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Google controls about 70 percent of the search advertising market. Doesn’t that give it a monopolist’s ability to set prices as high as it wishes? Brad Smith of Microsoft said Yahoo’s gains would be at the cost of American businesses. It does not. Google does not set the prices. Its advertisers do, bidding against one another for the amount they will pay when a user clicks on one of their ads. They do the same for ads on Yahoo and Microsoft search sites, too. Auction pricing is so deeply embedded in this business that you can see why Google and Yahoo innocently thought that their advertising pact, which was announced in July and is to be put into effect next month, would sail through a regulatory review to which they voluntarily submitted. The review continues.
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