World's leading ad agencies support Yahoo Microsoft merger

The agencies unanimously believe that this merger would improve competition in the market, and thus, sent a joint letter to federal regulators, showing their support for the merger.

This support from the ad agencies has drastically increased the merger’s chances acquiring an antitrust approval. The chief executives of the four firms, namely, WPP Group PLC, Publicis Groupe SA, the Interpublic Group of Cos. and Omnicom Group Inc., have asked the U.S. Justice Department to clear the deal.

The letter said, “We believe that Yahoo and Microsoft's proposal to combine their technologies and search platforms is good for advertisers, marketing services agencies, Web site publishers and consumers." It went on to say, "We urge the Department of Justice to bring its antitrust review to a speedy conclusion. This proposal enhances competition, and should be allowed to take effect as soon as possible."

United against Google
Google is the current, unchallenged leader in the market of search engines, and to combat this Yahoo and Microsoft had decided to work together in July. In this partnership, Yahoo will be selling the premium search ads, and Microsoft will take care of the technological bit. Revenue will be split between the two.

Chris Karagheuzoff, a partner and antitrust attorney at law firm Dorsey & Whitney said, "The Justice Department may not like reducing that industry by another competitor, but in this circumstance it's more likely they would allow it to go forward, because you're competing with a giant.”

The fact that the world's biggest ad agencies have come to a common conclusion has taken many by surprise, as these agencies are notorious for cut throat competition and marked disagreement on any issue.

The same ad agencies had shown much concern when Yahoo had talked about a search deal with Google in 2008.

Government's stand
In September, the Justice Department had revealed that the scrutiny has reached the “second phase”. The unrelenting question that the department faces is whether market competition will become healthier if Google has one strong competitor or two weak ones.

The deal, if it gets passed, will take two years to get operational, but it will bring Yahoo an operating profit of $500 million, and savings of $200 million.

Yahoo expressed their gratitude in a brief statement, "Yahoo welcomes the broad support this deal has received, and remains hopeful that the closing of this transaction can occur in early 2010."

Microsoft issued a similar statement.