Microsoft executive lashes out at Yahoo-Google deal

A man rides his bike past Google Inc. headquarters in Mountain View, California, May 8, 2008. REUTERS/Kimberly White

CANNES, France (Reuters) - A senior Microsoft executive on Friday criticized a new advertising deal between web search giants Google Inc. and Yahoo Inc., saying it would reduce competition in ad search and be bad for advertisers.

Kevin Johnson, President of the Platforms and Services Division at Microsoft, was speaking at the “Cannes Debate” moderated by Sir Martin Sorrell, the chief executive of British advertising group WPP, alongside executives of Yahoo and AOL.

Last week, Yahoo agreed to let Google put search ads -- advertisements placed next to search results -- after announcing separately that on-again, off-again merger talks with Microsoft Corp had failed.

News of the deal between the two ad search leaders has notably raised concern among advertisers it could drive up ad rates.

Reacting to Hilary Schneider, Executive Vice-President of Yahoo’s Global Partner Solutions division, who had described the deal as a “win-win”, Johnson said: “If win is consolidating around 90 percent of the paid search with Google, you can say, ok, Google would do that as a win.”

“I don’t think that from an industry perspective that supports having choices and having a number of strong players in the advertising business,” he added.

Commenting on Microsoft’s plans, he said: “So we are going to continue to invest. We are going to focus on our strategy and build a world class advertising platform.”

Reporting by Dominique Vidalon; editing by Tony Austin