What Exactly Did Jerry Yang Say
One of the most interesting parts of the Senate hearing yesterday, which examined the proposed search-advertising deal between Yahoo and Google, was a short scuffle over a comment reportedly made by Jerry Yang, Yahoo chief executive, at a meeting last month with Microsoft executives.
Brad Smith, Microsoft general counsel, recounted a meeting at which Yang said that the Internet search market had two poles -- Google makes up one pole and Yahoo and Microsoft make up the other. Any search advertising deal would pull Yahoo to Google's pole, freezing Microsoft out of the market.
Sen. Herb Kohl, (D-Wis.), chairman of the Senate Antitrust Subcommittee, said such a charge was "pretty explosive stuff." Sen. Arlen Specter, (R-Penn.) pointed out that Michael Callahan, Yahoo general counsel, had not contradicted Smith's claim. Callahan said he disagreed with Smith's "characterization" of the comment. When Specter pressed him on whether Yang had made the comment, Callahan said he couldn't recall.
This sparked a flurry of reminders from the panel to the tech executives that they were under oath. Smith said he stood by his testimony and said the comment made a "very strong impression" on Microsoft executives, especially Steve Ballmer.
The senators vowed to follow up on this issue and promised their staffs would continue to gather information on whether a partnership between Google and Yahoo would be anti-competitive.
The Justice Department and several state attorney generals are investigating the deal.
In a note to investors today, Stifel Nicolaus analyst Blair Levin said they doubted a disputed comment by an executive to be a huge factor, but "we believe it would prove troubling to investigators if the reported Yang sentiment is reflected in Yahoo-Google internal documents."
They added: "The flap reinforces our belief that Yahoo and Google have some convincing to do."
July 16, 2008; 5:21 PM ET
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