Astronomers Puzzled by New, Colorful Black Hole

No surprises here: The American Antitrust Institute won’t be endorsing Google’s proposed advertising partnership with Yahoo.

In a white paper published Tuesday, the Institute decried the deal as one that “could end up as a black hole that swallows up Yahoo, despite Yahoo’s intentions to stay in the business.”

Apparently, it doesn’t quite buy Google’s claims of altruisim. The company wants only to aid a floundering ally? Really?

“It strains credulity … to believe that Google would agree to an arrangement that gives its chief rival $800 million to invest in efforts that would, if successful, reduce Google’s market power,” the AAI wrote in its white paper. “… The agreement between Google and Yahoo is not a merger, of course, but serious concerns have been raised that the agreement will effectively result over time in Google’s acquisition of all or at least a substantial part of Yahoo’s paid search business.”

Still, the agreement could just as easily not do that. Said the AAI, “It is possible that the transaction will throw off sufficient revenue for Yahoo to not only protect its core business during difficult economic times but to underwrite its plans to become a stronger competitor than it now is.”

So, Google (GOOG) is either a friendly shoulder on which Yahoo (YHOO) can steady itself or a vast rainbow-colored black hole waiting to engulf it. Given that either-or, what to do?

Says the AAI: “The government should insist on a consent decree which preserves Yahoo’s incentives to remain in the paid search market. If such a consent decree cannot be achieved, then the government should seek an injunction to prevent Google and Yahoo from implementing their agreement.”