Report: Justice Department mulling antitrust suit against GoogleDeclan McCullagh,CNET NEWS

By Declan McCullagh,CNET NEWS , on 09-12-2008 07:39

Published in : Tech, The Internets

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he U.S. Department of Justice has reportedly hired a well-known antitrust litigator for a possible court challenge to a planned advertising deal between Google and Yahoo.

Former Walt Disney Co. Vice Chairman Sandy Litvack has been hired to head any legal challenge to the ad deal, according to an article published Monday by Dow Jones News Service.

It was not clear, the article said, whether any eventual lawsuit would target only the Google-Yahoo deal--or represent a broader assault on the Mountain View, Calif.-based company's business practices. Lawyers have been reportedly deposing witnesses and subpoenaing documents to support a courtroom challenge, which probably would be filed in Washington, D.C.

 Litvack was an assistant attorney general for antitrust in the Carter administration; until recently he was a partner at the law firm of Hogan & Hartson. As of Monday, his name no longer appeared on the firm's list of attorneys.

His now-deleted Hogan & Hartson bio said: "Sandy has successfully defended a number of shareholder derivative suits, as well as a variety of antitrust cases. His work has entailed representing both plaintiffs and defendants in both jury and non-jury cases."

Also this week, the Association of National Advertisers sent a letter to the Justice Department opposing the Yahoo-Google search advertising deal.

 The U.S. Department of Justice began gathering information from third parties in a probe of the advertising deal between Google and Yahoo.

Yahoo announced the nonexclusive partnership in June under which rival Google would supply it with some search ads, a move that could increase Yahoo search revenue but that also gives Google even more power in the market. Yahoo expects the 10-year deal to raise revenue by $800 million in its first year and to provide an extra $250 million to $450 million in incremental operating cash flow.

The partnership idea came to light during Microsoft's attempt to acquire Yahoo, which put more pressure on the Internet company to improve its financial results.

Faced with that financial challenge and a desire to push the Google ad deal through, Yahoo proposed to regulators that it subject the search advertising deal to a review process similar to one used for major mergers under the Hart-Scott-Rodino Act, said a source familiar with Yahoo.

Under the proposal, which was made to regulators when Microsoft still had a buyout offer on the table for Yahoo, the Internet search pioneer said it would give the Justice Department three and half months to review the deal before it implements the search advertising partnership.

Google's share of the U.S. search market reached 70.77 percent in July, according to Hitwise's most recent numbers. Yahoo's share of the market declined to 18.55 percent at the same time.

 


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