The House Energy and Commerce Committee's top Republican fired a shot over the bow at Internet firm Yahoo on Wednesday, asking CEO Jerry Yang about his company's newly announced advertising partnership with rival Google.
The letter from House Energy and Commerce ranking member Joe Barton was sent to Silicon Valley the same day that Yang was on Capitol Hill meeting with lawmakers about the deal.
"Given the consolidation within the online advertising industry, and with three companies dominating the U.S. online search market, I am concerned about how this collaboration will impact competition within the online search advertising industry," Barton wrote. He said he worried about how the relationship between Google and Yahoo would impact the collection, storage, and use of data relating to an individual's online activity.
The letter asked for details about Yahoo employees who, according to previously sealed court documents, expressed concerns that pairing with Google would result in a monopoly and asked how a deal that lets Yahoo run ads served by Google will not have an anticompetitive impact on advertising pricing. He also requested that Yahoo identify what data will be provided to Google about searches done on Yahoo.
Barton, who did not meet with Yang during his Capitol Hill visit, began the inquiry into online business practices with a letter to Google CEO Eric Schmidt in December about privacy issues associated with the now-final merger of Google and Internet advertising firm DoubleClick.
Energy and Commerce Oversight and Investigations Subcommittee Chairman Bart Stupak, D-Mich., and ranking member John Shimkus, R-Ill., were copied on Barton's latest letter, but aides said they did not know if a hearing is in the works.
Energy and Commerce Commerce, Trade and Consumer Protection Subcommittee Chairman Bobby Rush, D-Ill., and ranking member Edward Whitfield, R-Ky., said last week that they plan to hold a Web advertising hearing in the summer.
Across Capitol Hill, Senate Judiciary Antitrust Subcommittee Chairman Herb Kohl, D-Wis., pledged to keep a close eye on the Google-Yahoo agreement. "The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal," he said in a statement. A spokeswoman for Kohl said he was scheduled to meet with Yahoo's Yang on Wednesday afternoon.
The Senate Commerce Committee had scheduled a hearing for the same day to explore the privacy implications of Internet advertising but it was canceled. A spokesman for Sen. Byron Dorgan, D-N.D., who chairs the panel's Interstate Commerce Subcommittee, said the postponement had nothing to do with the Google-Yahoo deal and his boss was going to reschedule the hearing promptly. Neither Dorgan nor Senate Commerce Chairman Daniel Inouye was scheduled to meet with Yang.
"This deal was never going to go by without having hearings," a source close to Yahoo said, but the response to Yang's description of the pairing during his private briefings with members "was not alarm[ing]."
"People have been asking questions but are not raising any red flags," the source added. Another official with knowledge of the agreement noted that Microsoft, which withdrew an offer to acquire Yahoo in May, "has spent an awful lot of time inflating what the [Google] deal was -- so it was fully expected that the Hill would have questions."
As a pre-emptive strike, Google Vice President Omid Kordestani posted a message on the firm's policy blog last week saying the Yahoo deal will be good for the online marketplace.
"This kind of arrangement is commonplace in many industries, and it doesn't foreclose robust competition," he wrote, noting that Toyota sells hybrid technology to General Motors and Canon provides laser printer engines for Hewlett-Packard. "Google and Yahoo will continue to be vigorous competitors, and that competition will help fuel innovation that is good for users."
In a statement, a Yahoo spokesman said the firm "structured the agreement with Google so that Yahoo will not transfer any personally identifiable information to Google without user consent. We have also designed this agreement so that both companies have stayed within each of their existing privacy and data policies."
This article appears in the June 21, 2008, edition of National Journal Daily.