The counter-thrust came as Yahoo scrambled to find alternatives to Microsoft’s unsolicited bid, now worth $44.6bn…
While the internet company has fielded calls from a number of potential allies, including big media and telecoms companies, consideration of any other proposals is still at a very early stage, according to one person close to the company.
“Microsoft General Counsel Brad Smith has responded to today’s missive from Google on the Microsoft-Yahoo acquisition by highlighting Google’s dominance in search and advertising…”
Redmond, Wash., -– The combination of Microsoft and Yahoo! will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. The alternative scenarios only lead to less competition on the Internet.
“Today, Google is the dominant search engine and advertising company on the Web.”
Microsoft is committed to openness, innovation, and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo! will advance these goals.
In a more public sign of its interest in blocking a Microsoft-Yahoo deal, Google went public with its objection over the weekend, claiming that it could lead to less competition for internet services and might allow Microsoft to create a new monopoly.
Steve Ballmer, Microsoft’s chief executive officer, yesterday hit out at the idea of a Yahoo-Google alliance, arguing that only a deal with Microsoft could create a true rival to the search group.
“Any alternative scenario actually does not seem to enhance competition, and certainly that would be the message we will communicate to regulators,” Ballmer said in a meeting with financial analysts. “Google’s clearly got a dominant position — they have about 75 per cent of paid search worldwide.”
The figure quoted by Ballmer are accurate and highlight that no matter what Google says about IM and Email, regulators will be more concerned about advertising revenue and competition in the areas that count search than email.
An alliance with Google, which was considered but rejected last year, has sprung to the top of Yahoo’s list of options would involve Yahoo’s handing over management of its search engine advertising business, which last year generated $2bn in revenues.
Eric Schmidt, Google’s chief executive, phoned Jerry Yang of Yahoo at the end of last week after Microsoft unveiled its bid, though one person familiar with the approach characterized it as a very informal conversation.
Microsoft has a reasonable track record online in terms of openness and despite its small market share has innovated with some great technology such as Silverlight.
Meanwhile, Microsoft revealed that it planned to borrow money in the capital markets for the first time in its 31-year history to help pay for a Yahoo acquisition. It said it expected to use a stock-and-cash takeover of Yahoo to tap the capital markets.