As we rehash the Google-Yahoo story once more in light of the companies’ insistence to press forward into a non-exclusive search advertising arrangement - for which they have drawn considerable ire for earlier in the year when they trialed such a partnership at a time when Microsoft’s pursuit of a complete (and then partial) buyout of Yahoo, was still more or less on the table - there comes another provocation writ to the effect that the proposal is not anything to be alarmed by.

Actually, the exact title of the piece published today is “Why the Google-Yahoo ad deal is nothing to fear,” under which author and SJSU business professor Randall Stross presents a sort of “what monopoly?” flavor of argument. But the outline and commentary delivered by Stross makes some points that seem loose and even nitpicky at points. Altogether, the article hinges on the concept of auctioneering. Advertisers must bid, so all is fair, right?

Not quite. Yes, Stross makes a perfectly valid point to write up the auction process as the key factor in what drove Google and Yahoo to purportedly think they would not be troubled by a potential denial from regulators at the U.S. Department of Justice. (Though I think Stross steps a bit too far in thinking that Google and Yahoo “innocently thought that their advertising pact…would said through a regulatory review.” And Stross also steps leisurely past the fact that Google and Yahoo had played briefly without such an official OK before “they voluntarily submitted” to DOJ review, as he describes it.)

But the element of Google’s current market share (and, furthermore, what it would have access to following approval of this effort) is part and parcel of the sales process. It is, in short, what determines the value advertising. Advertisers pay considerably more to Google for ads that are more or less equal in size and shape to Yahoo’s own placements because Google’s audience is naturally much larger, and is growing still. (If third party analysts’ readings are accurate, Yahoo, Microsoft and others of the upper echelon of the Web search industry are either growing much more slowly, have become stagnant, or are decreasing in share.)

Another item Stross mentions is one I will just go ahead and paste verbatim:

“The deal would mean that some ads that visitors see on Yahoo’s search results page would be supplied by Google. Yahoo expects it will bring in $800 million annually in additional revenue because some search phrases get better results on Google, and some search phrases draw a plentiful number of advertisers on Google but none at all on Yahoo.

Everyone who wants to see Yahoo, the No. 2 search engine, regain some of its lost luster has abundant reason to cheer the deal on….”

The first paragraph is stands pretty much without error. Some search phrases do get better results on Google. And, yes, some search phrases do draw advertisers that don’t crop up in Yahoo’s own list of clients. But to claim that everyone who wants to see Yahoo regain some of its mojo should love the deal is, hardly something to consider seriously. That would be something a Google representative might say to sugar coat a message that would otherwise read as such: “Yahoo is hurting, folks. You want them to make more money? Here’s a quick fix. $800 mil’ for the next year, give or take some pennies. It might not budge the stock price, but Yang & Co sure could use the cash. And look at it this way, if we do good, Yahoo does good. That simple.” (Maybe throw in a “bada bing, bada boom” for spice.)

I have to say that it’s also a bit humorous to see Stross hedge some of his argument on an advertising deal made between Google and Ask.com, which started in 2002 and registered renewals in 2004 and 2007.

What this essentially comes down to is that there is always a mixture of pros and cons in the world of big business. Some win, some lose. And there’s really no disputing the fact that Yahoo will likely bring in that $800 million in revenue if the DOJ flicks on the green light. In that sense, yeah, it can be a winner. But the DOJ has to consider the perspectives of not only the advertising networks, but the advertisers themselves and the costs and potential repercussions associated with bridge-building between the #1 and #2 players in the industry. One example, the Association of National Advertisers, comprised of some 400 advertisers big and small, told the DOJ earlier this month that it was apprehensive of the deal, thinking it would amount to a 90% control over search advertising inventory. The government frankly can’t quite ignore that large an organization or pass it off as a kind of paranoia.

Also, the World Association of Newspapers too found the deal disconcerting. WAN president Gavin O’Reilly explained very plainly several days ago that, “Advertisers will increasingly migrate to Google since they will see diminishing price advantages to advertising through Yahoo. Google has refused to allow Yahoo to show Google ads on the websites of new publishing partners it acquires after the deal is finalized - in other words, Google has imposed a condition that impedes one of Yahoo’s last remaining opportunities to compete with Google.”

Statements made against the Googe-Yahoo deal aren’t, in the words of Mr Stross, an effort “to depict Google as a price-controlling monster.” At least not those statements made by parties doing business with one or both companies. Rather, they are a concerted push to scrutinize the possibility that Google, with a Yahoo partnership, will become a market controlling behemoth. Which has its downsides.

I would venture to guess others players would simply hang up their competitive hats, because so much traffic going one way means less traffic going in any other direction. Eventually the choice really just becomes a matter of being seen or not seen. That’s already the case now to some degree. It’ll be even more pronounced if Google-Yahoo becomes a real thing. The free market is quite a wonderful ideal, sure, but as observers recognize more than ever, some regulation is necessary to provide reasonable opportunity for all involved in the economic process.