In the wake of an ongoing antitrust investigation by the U.S. Department of Justice (DOJ) on the controversial partnership between search engine majors Google (News - Alert) and Yahoo, the companies will delay their Web advertising deal for some more time.

 

Analysts had commented that the proposed deal has the potential to disturb competition and may lead to higher prices because Google and Yahoo enjoy the top two market share positions in the search business. They felt that the dominant players would dictate prices in the market place.

 

“When we announced our advertising agreement with Yahoo in June we agreed to delay its implementation until October to give regulators time to look at the details,” Google said recently. “As we are still in conversation with the Department of Justice, we have agreed to a brief delay in implementing the agreement while those discussions continue.”

 

In the face of the controversy, Google recently launched a Web site explaining the advantage of the deal for advertisers. Besides, Google increased its public statements in support of the deal.

 

Google says that prices will remain fair because advertisers pay based on an auction system. “Neither Google nor Yahoo set advertisement prices,” wrote Tim Armstrong, president of advertising and commerce for Google in North America, in a recent blog post. “Advertisements are priced by an auction where an advertiser only bids what an advertisement is worth to them.”

As per the plan announced in June 2008, Google would provide advertising next to some of Yahoo's search results. The delay in the start of the partnership will give additional time to the Justice Department to review the deal and assess whether the alliance will hurt competition.

The probe and the delay in the Web partnership may benefit Microsoft (News - Alert), the No. 3 player in Web search, and a large group of advertisers.

 

Microsoft and major advertisers have protested the deal between the two search engine rivals because together Google and Yahoo control more than 80 percent of the rapidly growing U.S. market for search advertising.

Rajani Baburajan is a contributing editor for TMCnet. To read more of Rajani's articles, please visit her columnist page.

Edited by Eve Sullivan