The recent announcement of a deal between Microsoft and Yahoo! preceded letters to advertisers and ad agencies by both company's extolling the virtues of the deal struck. Foremost among the selling points being offered by the two tech giants is that the deal will supposedly encourage competition in the search engine market.
Under the deal, Microsoft's technology will power Yahoo!'s search pages and related advertising. This combines the second and third most popular search engines in the American market. Google presently dominates the market, attracting approximately two-thirds of American users.
Sen. Herb Kohl (D-Wisc.), chair of the Senate Judiciary Sub-Committee on Antitrust, said that the deal combined "industry giants and direct competitors in Internet advertising and search markets," and thus deserves "careful scrutiny."
Michael Callahan, general counsel for Yahoo! stated the companies' belief that the deal is "really the only way to ensure" that there is "going to be a competitive long-term alternative to Google in paid search."