The proposed deal where Yahoo turns over to Google a great deal of its search ad function is available via the SEC. Although it’s the redacted version, there’s enough detail to raise questions. Policymakers, consumer advocates, competitors, and the public should be concerned. The document underscores how competition has eroded in the online ad marketplace for search. The agreement first graph has this phrase [our italics]: “WHEREAS, Yahoo! desires to obtain the right to utilize Googleâ€™s monetization services in connection with certain web sites and Google desires to make these services available to Yahoo!.”
In other words, Yahoo! simply can’t make it on its own. Google gets to “conduct a review of each Prospective Yahoo! Partner Property” for the deal–which means Yahoo!’s relationships are now also Google’s. Google controls the ad copy–which Yahoo! can’t touch. Yahoo! becomes a mere licensee of Google services [“Google grants to Yahoo! a limited, nonexclusive and non-sublicensable license during the Term to access and use the Google Materials solely for the purpose of implementing and receiving the Services…”].
Beyond the deal’s threat to competition, there are privacy issues. Policymakers must ensure that we understand what data is being collected and shared by the two leading search firms. What information is to be obtained in what the agreement terms as a “client ID” [“Client IDâ€ means a unique alphanumeric code or other designation or identifier that is provided to Yahoo! by Google to be used by Yahoo! as a Client ID in accordance with the Documentationâ€¦Yahoo! must assign a separate Client ID to each category of [*].”] The * indicates a redacted portion of the agreement.
We believe this deal will further undermine competition in a key online ad sector,Â and only further strengthen Google. But beyond competition, consumers need to know how the deal will involve their data. Both Google and Yahoo should make it clear what data and analytics will be developed and shared.