Yahoo defends Google ad deal

Tries to allay competitions fears (but says it will go ahead whatever)

15 September 2008 11:26 GMT / By Katie Scott

They are facing resistance from a coalition of organisations in the US, and investigations by competitions bodies on both sides of the Atlantic, but Google and Yahoo are defending their joint ad initiative.

The deal has been termed an $800 million (£400m) annual revenue opportunity by Yahoo, which has also sought to allay fears that the deal will have a serious impact on advertising on the web.

In particular, a coalition of 16 American civil rights and rural advocacy bodies has been calling on the US government to stop the deal since May, pointing to the fact that Google and Yahoo control nearly 80% of the web search market between them.

However, just as the US government has appointed a veteran competitions lawyer to head up the US Justice Department investigation, Yahoo has again defended its plans but also said the deal will go ahead despite the investigations.

Hilary Schneider, executive vice-president of Yahoo US, told the BBC the agreement was "fully within the guidelines of the law".

"We are confident the agreement makes sense. We are committed to moving ahead", she added.

"Remember this is a voluntary process we engaged in and we think it's really working in terms of helping the Department of Justice understand the issues."

Yahoo co-founder David Filo added his confidence that the deal will get approval.

"We went to them (the DoJ) pro-actively and said "Let's go through a review".

"We have done that and we are confident that all parties will agree this is good for competition in the long term. And so we are expecting them to agree with that."

In separate news - Yahoo has also said that it is going to redesign its homepage to make it easier for users to access third party applications.

It is also going to open up its music service to the likes of iTunes and Amazon, and is encouraging more mobile applications by third party developers.