Congress held 2 separate hearings today on the The Yahoo-Google-proposed partnership.

Both the Senate Judiciary subcommittee and the House Judiciary subcommittee held hearings and here are the highlights:

Senate Judiciary Antitrust Subcommittee Chairman Herb Kohl, D-Wis., stressed that his panel will look at whether the deal, which will give Yahoo access to certain Google advertising tools, “will reduce Yahoo to nothing more than the latest satellite in the Google orbit.”.

House Judiciary Chairman John Conyers, D-Mich., asked whether the partnership would be more anticompetitive than a Microsoft purchase of Yahoo.

Sen. Charles Schumer, D-N.Y., said the arrangement could result in more tailored Web advertising. But he added he remains sensitive to allegations by Microsoft and others that the deal could pave the way for price-fixing and stifle Yahoo’s development in the search advertising arena.

Microsoft general counsel Brad Smith countered that the Google-Yahoo agreement would result in Google holding 90 percent of the search advertising market.

Smith Said Google already controls at least 70 percent of the market for advertising tied to search results. The Yahoo partnership, he said, will let Google control up to another 20 percent of this market _ reducing choices, pushing up prices for online advertisers and potentially compromising consumer privacy.

“Never before in the history of advertising has one company been in a position to control prices on up to 90 percent of advertising in a single medium,” Smith said. “Not in television, not in radio, not in publishing. It should not happen on the Internet.”

Smith also said in testimony that Yahoo Chief Executive Jerry Yang told Microsoft that the software maker wouldn’t be strong enough to compete in the online advertising market if Yahoo entered into a search-advertising deal with Google.  Smith, said Yang made the comments to Microsoft officials during a June 8 meeting between the companies in San Jose.

“Jerry Yang…looked us in the eye and said ‘Look, the search market today is basically a bipolar market: On one pole, there’s Google and, on the other pole, there’s Yahoo and Microsoft both competing with Google’,” Smith said.

According to Smith, Yang then said, “If we do this deal with Google, Yahoo will become part of Google’s pole. And Microsoft…would not be strong enough in this market to remain a pole of its own.”

Chief marketing officer Matthew Crowley of Yellowpages.com an AT&T subsidiary, which spends millions of dollars a year on Web ads testified that the partnership will weaken Yahoo and diminish Internet innovation.

If Yahoo “does anything but continue to compete all out to best Google, there is a real risk that the market will tip even further toward Google,” Crowley said, “No one in the industry wants that to happen.”

Yahoo general counsel Michael Callahan vowed to remain competitive despite the advertising partnership. “Yahoo is here to stay and we intend to compete across countless platforms,” he said, adding that the agreement does not signal Yahoo’s departure from the search business. “We have every intention of fighting Google and winning in this and in other areas for years to come.”

Callahan slammed Microsoft’s buyout efforts, saying it has turned to “activist shareholder” Carl Icahn, who owns about 5 percent of Yahoo, to spur a fire sale of the company. “We won’t allow our business to be dismantled and sold off piecemeal,” he said.

Google chief legal officer David Drummond argued Microsoft has a 90 percent share of the operating system business, a 90 percent share of productivity software, and an 80 percent share of the Web browser market.