Microsoft ga ga over Goo-Hoo! deal

Software giant campaigns against Google-Yahoo! tie-up

Microsoft kicked off a campaign on Friday against the advertising collaboration deal struck between Google and Yahoo!, Reuters reports.

Quoting two sources familiar with the matter, the news agency said that just one day after Google agreed to sell ads on Yahoo!’s website Microsoft contacted Washington-based advocacy groups that work to influence policy.

According to one source who received an email from the software giant, Microsoft grumbled that the search, advertising and IM deal between its two biggest internet rivals, which was inked last Thursday, would “limit choices for advertisers and publishers” and “destroy a competitive alternative.”

However, Google and Yahoo! have – presumably in an effort to avoid scrutiny from European Union and US regulators – stressed that the new tie-up is not a merger, won't take out any competitors, increase Google's share of search traffic or prevent Yahoo! from making similar arrangements with others.

Microsoft, if the quoted sources are to be believed, unsurprisingly disagrees.

The company has alleged that the two firms signed what amounts to a price-fixing agreement by effectively setting a minimum price for ads on some key word searches, according to another source familiar with Microsoft’s thinking who spoke to Reuters.

Microsoft was not immediately available for comment on any Redmond-led campaign that opposes the Goo-Hoo! deal.

On Friday Microsoft spokesman Jack Evans reiterated the firm’s party line on the agreement saying that it would hamstring competition in the increasingly lucrative web ad marketplace.

"Our position has been clear since April that any deal between these two companies will increase prices for advertisers and start to consolidate more than 90 per cent of the search advertising market in Google's hands," he said.

The US Senate's Antitrust Subcommittee said late last week that it will investigate Yahoo!'s Ballmer-battling search tie-up with Google. ®