ACCC gives Yahoo!-Microsoft search deal the go-ahead

Microsoft and Yahoo! may be able to achieve the necessary scale to provide effective and sustainable competition to Google

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Microsoft and Yahoo! May now have the critical mass to take on Google in the search and search advertising market in Australia, following the ACCC decision to allow a technology swap between the companies.

Under the deal, Microsoft's Bing search engine will power Yahoo's search site, and Yahoo will sell premium search advertising services for both companies. The terms of the agreement, which covers search only, is 10 years, in which Microsoft will have an exclusive license to Yahoo's core search technologies as well as the ability to integrate them into Bing. In turn, Bing will be the exclusive algorithmic search and paid search platform for Yahoo sites, but Yahoo will continue to use its technology and data in other areas of its business, in particular its display advertising.

After a 40 day review, the ACCC said the deal was unlikely to result in a substantial lessening of competition in the search and search advertising markets.

Specific factors informing this conclusion, the consumer watchdog said, were that Microsoft and Yahoo! had an existing relationship in Australia, in which Microsoft utilised Yahoo!'s paid search platform.

“Therefore, Microsoft and Yahoo! through their respective Australian subsidiaries — ninemsn and Yahoo!7 — did not compete for paid search advertising in Australia,” the ACCC said in its ruling.

Additionally, Microsoft and Yahoo!'s share of online paid search advertising queries in Australia was found to be limited and the proposed agreement did not appear to decrease innovation incentives for Microsoft, Yahoo! or Google.

“In combining search engine platforms, Microsoft and Yahoo! may have been able to achieve the necessary scale to provide effective and sustainable competition to Google, which had a very large share of online paid search advertising queries,” the ACCC said.

“As the proposed agreement between Microsoft and Yahoo! related only to online search advertising, the ACCC did not consider the national market for the supply of online display advertising.”