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Google And Yahoo Confident Of DOJ Test

Google and Yahoo think their search partnership should easily pass the U.S. Justice Dept.'s sniff test, which was formally announced yesterday. They claim the deal is not a merger, it covers only a small part of Yahoo's search business and it's not exclusive, meaning third parties (i.e. Microsoft) are welcome to strike similar deals. In fact, Dana Wagner, Google's competition counsel, says the deal was structured not to raise anti-competition concern.

Not so fast, says BusinessWeek writer Catherine Holahan. You can be sure that antitrust officials at the DOJ will give the deal a thorough examination. The case against it centers on the idea that Google already dominates search. Partnering with Yahoo, the No.2 search provider, would effectively solidify Google's search monopoly. The government frowns upon monopolies because they leave one company in control of pricing. Opponents to the Google-Yahoo deal say it would result in increased search prices for advertisers.

Microsoft, of course, is the biggest opponent to the deal. Microsoft also happens to run a virtual monopoly with its Windows operating system software. "This is the first time we have had two monopolists trying to convince us of things," said Robert Lande, a law professor at the University of Baltimore School of Law and director of the American Antitrust Institute.

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