Microsoft slams Google-Yahoo! ad deal

Microsoft has said the proposed deal between Google and Yahoo! could have a negative impact on competition, consumer choice and privacy.

In a congressional testimony regarding the deal, the general counsel for Microsoft, Brad Smith, questioned the legality of the tie-up.

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The deal would allow Yahoo! to use Google's advertising technology with Google ads appearing next to Yahoo! search results in Canada and the US.

Smith said if search is regarded as the gateway to the internet then this deal would put Google in "a position to own that gateway and the information that flows through it".

According to Smith this would allow Google to have a complete picture of people's online activities, raising concerns around privacy.

"If that happens, Congress won't need to enact a federal privacy policy, we will already have a national privacy policy - Google's privacy policy," Smith added.

In addition, Smith said never before has one company been in a position to control prices on 90 per cent of advertising in a single medium and it shouldn't happen on the internet.

He said the $800m Yahoo! estimates the deal could generate will come out of the pockets of US businesses as they will be forced to pay higher prices for ads they already buy from Yahoo!.

Smith testified to the US Senate Judiciary Committee Subcommittee on Antitrust and the House Judiciary Committee Antitrust Task Force, both of which are looking at the implications of the deal.

Yahoo! recently rejected a joint bid from Microsoft and investor Carl Icahn for its search business. Microsoft also tabled an unsuccessful bid for Yahoo! back in February.