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Wednesday, July 16, 2008
Microsoft Concerned About Google-Yahoo Deal

Brad Smith, Microsoft senior vice president and general counsel, testified on the Google-Yahoo deal and the future of Internet advertising today before the Senate Judiciary Committee Subcommittee on Antitrust and the House Judiciary Committee Antitrust Task Force.

In his testimony before both committees, Smith questioned the legality of the deal, outlining the damage it could do to competition in online advertising and innovation on the internet.

"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," said Smith. "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."

"When Yahoo talks about this deal generating up to $800 million in additional revenue, that?s money out of the pockets of American businesses, big and small, who will pay higher prices for the very same ads they buy from Yahoo! today," Smith continued.

Smith said that this agreement would give to Google an unprecedented level of control over advertising for search on the Internet ? up to 90 percent potentially of all search ads. This would mean fewer choices for online advertisers on the Internet, leaving them with no choice but to do business with Google.

Smith added that Google's monopoly in advertising business would lead to higher prices for those advertisers.

The deal would also put Google in control of the gateway to the internet: searches, raising significant privacy implications.

On privacy, Smith said: "If one company ? Google ? controls up to 90 percent of online search advertising it will have a complete picture of your online activities. If that happens, Congress won?t need to enact a federal privacy policy, we will already have a national privacy policy ? Google?s privacy policy."

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