Citing Microsoft's proposed $44.6 billion bid for Yahoo as ''troubling'', search firm Google wants regulators to scrutinise the proposed deal. By Dhruv Tanwar
Mumbai: Citing Microsoft's proposed $44.6 billion bid for Yahoo as ''troubling'', search firm Google wants regulators to scrutinise the proposed deal.
In a blog, Google said the tie-up has the potential to ''unfairly limit'' consumers ability to freely access competitors' email and instant messaging services, while trying to build a case against the deal on the basis of negative sentiment against Microsoft, a legacy from earlier anti-trust cases. Google says the deal goes against the basic principles of openness and innovation that the Internet stands for.
However, Microsoft's contends, via Kevin Johnson's statement that a combination of itself and Yahoo! would be the basis for some competition to Google's international dominance of the search marketing space. Microsoft's general counsel, Bradford L. Smith, had said in a statement, ''The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising.''
Given Google's dominance of the online search and advertising market, it would be uncomfortable, if not difficult, for competition regulators on both sides of the Atlantic to form a credible strategy against an alliance between Microsoft and Yahoo.
Together, Microsoft and Yahoo! would still have a much smaller share of the online search and advertising market than Google, but would form the only credible line of defence against total domination of the space by Google.
Reports in the media also indicate that on the side, Google chief executive Eric Schmidt, communicated with Yahoo's chief Jerry Yang, ostensibly offering Google's assistance to fend of Microsoft's unsolicited advances. Google is also reported to be evaluating strategies in Washington to present a case against the proposed deal to lawmakers in a way that would most definitely throw a spanner in the works, and if nothing else, lead to a prolonged regulatory review that could subtly work in its favour.
Yahoo is yet to make a public statement about the proposed deal since news of the bid broke close to last weekend. At the time, it had said that it was weighing Microsoft's offer as well as alternatives, and would ''pursue the best course of action to maximize long-term value for shareholders.''
Reports in the media also indicate that other possible contenders for Yahoo!, such as News Corporation, Time Warner, AT&T, and Comcast have not jumped at the opportunity to get a piece of the Internet company. Apparently, Microsoft's deep pockets are the biggest deterrent, as it could easily outbid most suitors in a bidding war, if there ever was one. That leaves Google as the single entity to be robbed of its slumber on account of this possible deal.
Another theory doing the rounds is that Yahoo! could possibly be broken up for its parts, which could be more valuable individually rather than collectively. Speculations were rife that the search-related business could go to Google, while other parts that generated original content and other unrelated operations could be spun off into individual parts. Yahoo Finance, has been stated as a great piece of the pie for a company such as the News Corporation, as has Yahoo Sports for ESPN.
However, counter strategists were quick to indicate that even if the company were to be broken up into as many pieces, there was no way that the sum of all parts would be ''even in the same zipcode'' as $44.6 billion.
For now, the US competition authorities will launch an investigation this week into the proposed takeover of the internet portal specialist Yahoo by Microsoft.
The US Congress's Judiciary Committee is reportedly set to hold its first hearing on the deal later in the week, even as Yahoo is yet to formally respond to Microsoft's proposals.
Though the Judiciary Committee does not have powers to veto the deal potential deal between Microsoft and Yahoo, its interest in the matter will most definitely cause some angst at Microsoft, ensuring the loss of some sleep there as well, much to the satisfaction of people at Google. For one, Microsoft has had some experience and run-ins with competition regulators, specially in Europe.
European Union's competition commissioner Neelie Kroes has already envisaged interest in an investigation into a possible merger between Microsoft and Yahoo, however clarifying that previous rulings against Microsoft ''would be irrelevant to such an inquiry.''