Microsoft goes to Congress with Yahoo-Google deal

General counsel Brad Smith told a congressional hearing on Tuesday that Microsoft feels the proposed search advertising deal could harm the market and slow innovation.

"Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium," contended Smith.

"If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it," said Smith.

Yahoo struck the deal with Google earlier this year as the company was trying to fend off a public takeover bid from Microsoft. By displaying Google's ads in its search results, Yahoo estimates that it will generate some US$800 million in revenue.

Smith, however, contends that the deal will also allow Google free reign to raise the prices it charges advertisers.

"When Yahoo talks about this deal generating up to US$800 million in additional revenue, that’s money out of the pockets of American businesses, big and small, who will pay higher prices for the very same ads they buy from Yahoo today."

Microsoft also warned of privacy concerns. The company has publically warned authorities of Google's reach in the advertising market since it acquired DoubleClick back in 2007.

Smith reiterated that point on Tuesday, telling congress that the deal would also give Google free reign over what user information is shared with advertisers.

"If one company controls up to 90 percent of online search advertising it will have a complete picture of your online activities," said Smith.

"If that happens, Congress won’t need to enact a federal privacy policy, we will already have a national privacy policy – Google’s privacy policy."

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