“Anyone who thought Google would stand by and watch Microsoft take over Yahoo should think again. Over the weekend, Google moved to block the $44.6 billion bid for Yahoo.”
Google’s CEO reportedly has offered help to Yahoo’s CEO, and Google is expected to make Microsoft’s proposed takeover of Yahoo difficult by fanning the antitrust furor.
In a blog, Google said the tie-up could unfairly limit the ability of consumers to freely access competitors’ email and instant messaging services.
Google’s David Drummond used the Google Blog to cite antitrust concerns and indicate the Microsoft-Yahoo merger would be bad for the Internet despite the FTC’s approval of the Google-DoubleClick acquisition.
Microsoft’s announcement on Friday of a hostile takeover bid for Yahoo stirred up Silicon Valley over the weekend, as Google loudly voiced antitrust concerns, Yahoo’s board emphasized that it will take its time evaluating the bid, and analysts questioned whether the offer price of $31 would be raised.
Steve Ballmer, Microsoft’s chief executive, told analysts at a briefing on Monday the proposed takeover would create a “strong number two competitor”.
He argued that competition would get fiercer, particularly in the market for online advertising.
“Google’s clearly got a dominant position. They have got about 75% of paid search worldwide,” Ballmer said.
Microsoft’s Brad Smith insisted the Yahoo merger would benefit competition as analysts suggested Microsoft might have trouble retaining Yahoo engineers and Yahoo’s board said it will take its time.
The Wall Street Journal and The New York Times are reporting that Google CEO Eric Schmidt called Yahoo CEO Jerry Yang to offer help against Microsoft’s bid to take over the company.
Yahoo’s board reportedly conferred by telephone on Friday, and has not yet taken a position, nor have any rival bids emerged, according to the Journal, which cites people familiar with the matter.
“Neither Yahoo nor Google were immediately available to comment.”
In a telephone interview, Greg Sterling, principal analyst with Sterling Market Research, said Google’s “not-so-behind-the-scenes” comments highlight the “bitter contest” between the search giant and the software giant. “It is high drama,” he said.
Google’s antitrust argument may not win the day — it will be hard for the Federal Trade Commission to deny Microsoft, having just approved Google’s acquisition of DoubleClick — but Google is well served by delaying the merger for as long as possible, Sterling said. “They may be able to speed ahead,” he added, as the deal slowly moves through the approval process.
This is clearly Google’s opening move in a complex game of chess that will encompass ordinary users, politicians, regulators and businessmen
Darren Waters, technology editor, BBC News website.
“Drummond suggested Microsoft may attempt to exert an “inappropriate… influence” over the internet.”
Smith, Microsoft’s top lawyer, returned fire Sunday. The “combination,” he said, labeling it neither a merger nor an acquisition, would result in a “more competitive marketplace” for search and online advertising.
A Google bid for Yahoo is unlikely because antitrust regulators are not likely to approve the acquisition, but Google could indirectly influence the outcome of Microsoft’s bid.
Analysts are speculating that Google could help a company in which it invests or a third party to which it contributes engineer a bid for the vulnerable Yahoo, Sterling said.
“There is speculation that Google is offering its search and corresponding monetization to Yahoo, but Yahoo has rebuffed this idea in the past,” Sterling said.
“For its part, Yahoo’s board let it be known that it would not rush to judgment on the offer.”
A FAQ posted on the corporate site said the board would “take time to thoroughly evaluate the proposal” while evaluating alternatives – “including maintaining Yahoo as an independent company.”
If Yahoo does go for the deal, Microsoft faces very substantial cultural issues in integrating the Web pioneer, Sterling said. “There are hard choices to be made. There are probably many places were Microsoft has a stronger technology but Yahoo has stronger brands. Do you maintain the Yahoo shell and host them on the Microsoft platform?”
Microsoft’s bid was announced on Friday, so there is plenty of time for these questions to be addressed. Google seems bent on making sure lawmakers look at all the angles.
“We take Internet openness, choice and innovation seriously,” Drummond said. “They are the core of our culture. We believe that the interests of Internet users come first — and should come first — as the merits of this proposed acquisition are examined and alternatives explored.”
While it is certain that a Microsoft-Yahoo merger will have an impact on the Internet, it is still unclear to how serious that impact will be. It is also encouraging to see Google add its voice to the debate and question what a Web controlled by Microsoft could look like. In the end, however, it is up to the Internet’s denizens and their voices to help shape the future of the online world.