News : Newspapers say Google, Yahoo tie hurts competition

WASHINGTON (Reuters) - A deal by Google Inc and Yahoo Inc to share some advertising revenue will mean less money for newspapers and weaken Yahoo in the long run, the World Association of Newspapers said on Monday.

The group, which represents 18,000 publications worldwide, criticized a deal struck in June in which Google will supply Yahoo with advertising services to run alongside Yahoo's own Web search system. Together the two companies have more than 80 percent of the search market.

"Competition between both these two search companies has provided a necessary check to any potential market abuses, and has helped to ensure that publishers and content generators are capable of earning an equitable and fair return on their content," the group said in a statement.

"W.A.N. strenuously opposes Google's attempt to take over a portion of Yahoo's content advertising and syndicated search business," the newspaper group said.

The newspaper association expressed concern the deal was announced as publishers battled Google over copyright issues.

The group also argued that "with respect to paid search ads, the deal can be perceived as an agreement to fix prices."

Google usually charges between 20 and 35 percent more than Yahoo on average, the group said, citing a study that found that "prices on Yahoo will increase by an average of 22 percent under the deal."

Although Google and Yahoo said the deal would only be in effect in the United States and Canada, the World Association of Newspapers said it would hurt Yahoo's effort to compete vigorously against Google and give Google a valuable window into Yahoo's ad business.

"The proposed deal will fatally weaken Yahoo as a competitor (to Google)," said the newspaper group, in calling on European antitrust authorities to scrutinize it.

(Reporting by Diane Bartz; Editing by Andre Grenon)