The Wall Street Journal reports today that DOJ is showing "signs the government may be preparing to recommend an antitrust challenge to the deal."
"That argument makes no sense to me at all. I wonder how they justify it. The way auction systems work is supply and demand. [Having more auctions] doesn't increase the supply [of places to advertise.] This is, like, very basic economics."
He notes that the argument seems to be saying competition will be lower on the less popular ad system. But that's because, he argues, the less effective one doesn't give you the retun on your money to justify higher prices. People only bid higher on Google ads because they get their money's worth. "Even when ads are more expensive, they more than pay for themselves."
Essentially he's saying: If you want to compete in online advertising, make your ads more relevant and worth more money! Are Microsoft and Yahoo listening?
The most interesting point to me is that if this deal is blocked, it won't hurt Google at all. It will hurt an already-suffering Yahoo. Maybe the deal would even teach Yahoo a thing or two about how to run an effective advertising system.