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Senator Herb Kohl (D-Wis.) is okay with the Google-Yahoo deal, but he wants the DOJ to keep a close eye on the implementation. In a letter to Assistant Attorney General Thomas Barnett, Kohl, Chairman of the Judiciary Subcommittee on Antitrust urges:

Recognizing the nascent and fast-changing nature of this marketplace, we encourage the Department to continue to monitor the state of competition in this industry, whatever the outcome of its current investigation. If, over time, you determine that Google is gaining a dominant market position as a result of the Google-Yahoo agreement, then we would encourage the Justice Department to intervene to protect competition. Even should you conclude at present that this deal is not contrary to antitrust law, the Department must be sure that this deal never in the future crosses the line into an unacceptable, anti-competitive collaboration among competitors which will harm consumers and advertisers.

Kohl also acknowledged both the fears of advertisers and the assurances of Yahoo and Google. I think it’s prudent to let the deal go through, but to watch as the program unfolds to see if anti-competitiveness occurs.

What do you think?

h/t Reuters

In Google’s quest to make sure its search advertising deal with Yahoo goes through, it has added yet another defense to its arsenal: a new facts site. If it sounds political, that’s because it is. The Department of Justice opened an official investigation into the deal months ago. It turns out that when the largest search engine teams up with the second largest search engine to combine advertising, it raises antitrust issues!

On the homepage, Google doesn’t waste any time getting to the three major talking points it touts in support of the deal:

• This is a non-exclusive deal that will strengthen Yahoo!.
• Ad prices will continue to be set by competitive auction.
• The deal is win-win for consumers, advertisers and publishers: more and better ads.

On the right hand side is a link to an in-the-tank New York Times article that drinks extremely potent Kool-aid by practically copying and pasting a previous Google blog post supporting the deal.

Underneath that are quotes from rather large advertisers who also support the deal.

But those who have the most to lose from the deal are small businesses and web entrepreneurs who, rightly or wrongly, have built their success on Google. They fear a sharp increase in prices once the deal goes through.

Google assures that hardly anything will change, save for Adsense ads showing up on Yahoo. They also point to their relationship with Ask.com as proof that the marketplace will remain competitive.

But Ask, despite its slight growth, is not Yahoo. And when it comes to politicking, people have been burned far too often by broken promises. Plus, websites have also been burned by changing algorithms and vague policies.

Right now, in the midst of a significant economic prices, people are looking for stability. And they’re not finding it in huge companies with enormous, quick growth. The housing market is certainly different from the search market, but with sensitive emotions running high, Google just seems insensitive right now, another characteristic of companies “too big to fail.”

I don’t know what they hope is the outcome of this site. Do they hope for a groundswell of support and grassroots letter writing campaigns on their behalf? I just don’t see that happening.

Google needs to continue its lobbying and legal advocacy with the Department of Justice. But unless Google wants to suddenly become more transparent on their algorithms and site penalties, then they should just leave the little guy alone in this effort.

Sourcetools.com, a former business directory, was making $115,000 a month in profit until the summer of 2006, when Google changed its algorithm and spiked some AdWords bid prices for sites with “poor landing pages.” The business model was one employed by many an internet entrepreneur - bid on AdWords and slap some AdSense on the site.

Of course, Google calls this ad arbitrage if all you have is a made-for-adsense site. But Sourcetools provided a service - a business directory not unlike many other directories out there.

Sourcetools spent a ton of money revamping their site to make it to Google’s liking, not that Google was being terribly specific about what that liking is. But they could never get back into Google’s good graces, and now the domain sits service-less, and up for sale.

This is just one of the many complaints being sent to the Department of Justice as they conduct an investigation into Google’s ad deal with Yahoo.

Last week, the Association of National Advertisers sent a letter to the DOJ expressing their opposition to the deal. And the DOJ is taking the concerns seriously. They hired antitrust lawyer Sandy Litvack to consult on the deal.

Whether Google’s actions are an inadvertent breakdown in internal communications or intentional pursuit of power, they do appear to be monopolistic. That along with today’s financial news is a good reminder that to be wary of fast money and to diversify your site’s income!

via NYT

Online video search engine blinkx has sent a letter to digital advertising company MIVA, seeking to acquire it for $1.20 per share. Yesterday’s closing price for MIVA stock, which trades on the NASDAQ, was $0.78.

MIVA has certainly had its share of trouble of recent years. The company has gone through reorganizations and a management shakeup in the hopes of stabilizing the business, which includes a pay-per-click offering.

Here’s the full text of the letter for your consumption.

August 8, 2008

MIVA, Inc.
5220 Summerlin Commons Boulevard
Suite 500
Fort Myers, FL 33907
Attention: Peter Corrao, CEO
Larry Weber, Chairman
Members of the Board of Directors

Dear Ladies and Gentlemen,
Re: blinkx and MIVA Combination

I am writing on behalf of the board of directors of blinkx Plc to make a proposal for the business combination of blinkx and MIVA. Under our proposal, blinkx would acquire all of the outstanding shares of MIVA common stock for $1.20 in cash per share. Our proposal is not subject to any financing condition. The transaction would be funded from existing cash resources of the two companies.

Proposal. Our proposal represents a 54.0% premium above the closing price of MIVA common stock of $0.78 on August 7, 2008, and a 36% premium over the average closing price for the one month prior to August 7, 2008.

By whatever financial measure one might use, we believe this proposal represents a compelling value realization opportunity for your shareholders and the quickest and most secure way to see such value, particularly given the several challenges MIVA faces in the near term, including: risk and cost associated with the new technology platform, a deteriorating cash position, continued deterioration of the Media EU business and continued decline in revenue and profitability.

We believe that MIVA’s shareholders would not be well-served by any delay in negotiating or completing the merger process, and that time and/or another round of restructuring plans will not significantly increase MIVA’s valuation.

Background. Having worked together for a number of years you will be aware that blinkx is the world’s largest and most advanced video search engine. Founded in 2004 by Suranga Chandratillake, the company completed a successful IPO on the London Stock Exchange (AIM) in May 2007 and currently has a market capitalization of approximately $160 million, with headquarters in San Francisco, CA and the UK. With an index of over 26 million hours of searchable video and more than 350 media partnerships, including national broadcasters, commercial media giants, and private video libraries, blinkx has cemented its position as the premier destination for online TV. blinkx pioneered video search on the Internet, enhanced by $150 million in R&D over 12 years, and is now protected by 111 patents.

Rationale. blinkx believes that a combination of the two companies would be mutually beneficial to both companies’ shareholders, employees, and customers. blinkx and MIVA have complementary businesses that could benefit greatly from blinkx’s technology and MIVA’s distribution network.

blinkx has worked with MIVA as a customer and partner for a number of years and has a great deal of respect for MIVA’s success in building a global keyword advertising network and growing the MIVA Direct consumer offering. We believe, however, that with the Internet’s continued progression towards rich media and newer forms of advertising, more advanced technology will play a fundamental role in achieving success.

blinkx already has in place a proven and growing video-driven revenue engine, and enjoys an unrivalled technology portfolio which is applicable across many aspects of the online market. A combination of the two companies - fusing MIVA’s advertising network with blinkx’s ability to leverage its technology portfolio into the online market - presents an exciting and compelling opportunity.

Specifically, blinkx’s advanced and scalable matching technology will enable immediate platform improvements for MIVA. As a result large portions of relevant search traffic from MIVA’s search ad network will be monetizeable at higher rates through blinkx’s technology. Furthermore blinkx’s technology holds the potential to build on MIVA’s existing toolbar network, adding the latest functionality and an entirely new revenue stream. Finally, MIVA’s consumer sites and portals, that already attract large audiences, will immediately benefit from blinkx’s advanced video technology and AdHoc advertising platform.

Process and Employees. We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company. We believe that the management and employees of MIVA are critical to realizing a successful transition and foresee an important and central role for MIVA employees in the combined company.

Any acquisition of MIVA would be subject to the opportunity to conduct a limited confirmatory due diligence investigation, the negotiation of a definitive merger agreement containing customary terms and conditions, including customary conditions to closing; no material adverse change to MIVA’s business; appropriate shareholder approvals; and any regulatory requirements. Given our participation in the industry and MIVA’s public status, we envisage an efficient due diligence process appropriate to a public company. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

Due to the importance of these discussions and the value represented by our proposal, we expect the MIVA Board to engage in a full review of our proposal and discussion of its contents with MIVA’s shareholders. We are prepared to meet at a time and location of your convenience to complete due diligence and commence definite agreement negotiations.

We believe this proposal represents a unique opportunity for MIVA’s shareholders to realize value, and the combined company will be well positioned for future growth. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favourable reply.

Yours sincerely,

Suranga Chandratillake

CEO and Founder

With so much disappointment in the Yahoo board among shareholders, how did Chairman Roy Bostock and CEO Jerry Yang manage to get more votes this year than at last year’s shareholders meeting? That’s a question on the minds of Capital Research & Management, which sent proxy committees to represent its two funds that own a big chunk of Yahoo stock. The proxy committees recommended that votes for Bostock and Yang be withheld in order to demonstrate their disapproval of Microsoft’s bid.

Capital Research & Management has talked with Broadridge Financial Solutions about investigating the vote to see if some votes were not counted. The way the votes stand now, it would appear that if CR&M’s votes were counted - and they withheld them, they were among the only to vote against Bostock and Yang, which seems a bit odd given the current climate

Additionally, fewer votes were cast than last year, which only adds to the drama. On the one hand, perhaps fewer people wished to vote when they were so disappointed with the current board. On the flip side, wouldn’t more people want to show up during such an important year and make their voice heard? An investigation into the vote count could answer this question.

Yahoo has said they have played no part in a possible error in the count. Yahoo doesn’t perform the vote count, but instead a third party is required to do so.

via BoomTown

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Just a few weeks after the US Department of Justice formally opened its investigation to the Yahoo-Google search advertising partnership. Now, about a dozen states are looking into the matter, according to the Washington Post.

Not at all surprising, Connecticut is one of those states. Earlier this year, a bill was introduced to the state’s General Assembly that sought to tighten the rules of data collection for companies who serve ads on sites they don’t own.

Connecticut Attorney General Richard Blumenthal told the Post, “We’re looking at it because we’re concerned about an excessive concentration of market power.” Connecticut has subpoenaed both Yahoo and Google for documents related to their new partnership.

Also issuing subpoenas is the state of Florida. Recently, the Sunshine State has been cracking down on online ad fraud. A spokeswoman for the Attorney General Bill McCollum told the Post, “We are reviewing the proposed transaction in conjunction with other state attorneys general, as well as the Department of Justice.”

In the wake of Carl Icahn’s declaration that Microsoft would buy a Yahoo run be a different board (and Microsoft’s affirmation of the claim), Google CEO Eric Schmidt hasn’t changed his position on what should happen with Yahoo. Speaking to reporters in Idaho yesterday, he reiterated that he believes an Independent Yahoo is best for the industry.

Schmidt called Microsoft’s bid for Yahoo “anti-competitive,” something Google has been saying from the beginning. He also said that the Redmond-based software giant has a history of being anti-competitive, and that’s evidence enough of their intentions with acquiring Yahoo.

Of course, Google is facing its own anti-competitive issues with its recently announced search advertising deal with Yahoo. Despite the partnership being non-exclusive, the Justice Department formally opened their antitrust investigation into the matter earlier this month.

Still, it’s no doubt that the search ad deal fuels Schmidt’s desire for Yahoo to remain independent. That and a Microhoo would mean a stronger second place competitor in the search ad marketplace. Though, most would agree that second place is definitely first loser in a Google-dominated search industry.

We knew this was coming. The Justice Department has begun a formal antitrust investigation into the search advertising agreement recently announced between Google and Yahoo. But other internet companies will be required to provide documents, according to the Washington Post. The move is thought to indicate a closer scrutiny than originally expected.

Lawyers told the Post that the demand for documents from other companies suggest that Google-Yahoo deal will be reviewed by those higher up in the antitrust division of the DOJ.

Still, the investigation should come as no surprise. When Yahoo was running a test of Google’s ads back in April, the Justice Department investigated. However, they were notified of the test ahead of time.

If you notice a change to the volume of clicks on your Yahoo paid search account, the Traffic Quality Center can help you figure out what caused the change. Now, there are three new updates to help you figure out what’s going on.

The three updates are:

A submission form to initiate a click investigation
• ”Ask Ace“: A new question-and-answer column written by one of our traffic quality experts.
• Animation on the homepage highlighting our stance on “bad clicks.” Refresh your browser to watch different versions.

Reggie Davis, VP of Search Quality wrote on the Yahoo Search Marketing Blog that there are several reasons why your clicks may fluctuate. Here are several examples he gave for a change:

• Changes to an ad’s ranking in search results
• A change to the match type used for your ads
• Keyword seasonality
• A new distribution partner added to the Yahoo! network
• Yahoo! Buzz placement, where searches on certain popular keywords can be performed directly from the page content.
• Yahoo! Front Page placement, where searches on certain popular keywords can be performed directly from the page content

What do you think of these updates? Have you had success with the Traffic Quality Center? Let us know in the comments.