Yahoo/Google Proposal: Questions Arise at House Subcommittee Hearing on Wednesday

With the proposed Yahoo/Google advertising partnership in the news, some on Capitol Hill have expressed concerns about the Internet being vulnerable to a lack of competition. House Regulations Subcommittee Chairman Charles Gonzalez said Wednesday that he believes it is "unhealthy" for individual Internet firms to dominate the market. Internet businesses, however, responded that too much government regulation stifles growth and innovation.

(Read Google's announcement on their deal with Yahoo on the Google blog: http://googleblog.blogspot.com/2008/06/our-agreement-to-provide-ad-technology.html)

CongressDaily reports:

Internet business owners told the House Small Business Regulations Subcommittee Wednesday that Congress to should use a light touch on their industry, saying such an approach is vital to the industry's health.

The hearing comes in the wake of Yahoo unveiling a proposed advertising partnership with Google.

Google and Yahoo executives say the arrangement will be good for the online market, but Regulations Subcommittee Chairman Charles Gonzalez, D-Texas, is not convinced.

"I understand where we are today, but the question is: Where will we be tomorrow? I think it needs to be explored," Gonzalez said. He said he believes it is "fundamentally unhealthy" for one company to dominate an area of the Internet.

Senate Judiciary Antitrust Subcommittee Chairman Herb Kohl, D-Wis., and House Energy and Commerce ranking member Joe Barton are examining the pairing, and the House Judiciary Committee's antitrust task force has scheduled a hearing on Internet competition for Friday. Business dealings that risk diminished competition do not serve the public or business worlds well, Gonzalez said.

Richard Lent, founder of Web development firm AgencyNet, said there should be "a high level of scrutiny" of the Google-Yahoo deal and any other transaction that increases a company's dominance in a given field, but legislative action would be premature. In the Internet industry, "somebody will build a better mousetrap" and a single firm's supremacy does not last forever, he said.

Askthebuilder.com founder Tim Carter agreed, saying that Web surfers can decide for themselves what Web tools to use and that not everyone swears by Google or Yahoo. Carter, who provides online advice for home improvement projects, said "consumers in America are voting each day [and] they're electing each day that Google, for the time being, is the winner."

Interactive Advertising Bureau CEO Randall Rothenberg, who counts Google, Yahoo and other tech luminaries as his members, told the subcommittee there are "legitimate subjects for Congress to look at and competition is one of them." However, the dynamism of the online industry shows that "we have a system that ain't broke," he said.