Hello, Yahoo - Microsoft, what about the regulators?

What if, just before two Davids entered the ring to take on Goliath, the referee blows the whistle and calls the fight unfair, as two cannot take on one, never mind how big Goliath is? This is exactly what US anti trust regulators might end up doing in the Yahoo-Microsoft alliance.

The 10-year web-search partnership announced yesterday by Yahoo and Microsoft (See: Microsoft, Yahoo! agree on joint search) to take on the might of Google in web search, will not be easy as the new team of regulators in Washington is sure to flex its muscles, apart from the aggressive European Union regulators who in the recent past have been scrutinising mergers, joint ventures and patent issues with a magnifying glass. 

In the complex deal announced yesterday under which, Yahoo will essentially give up its search business and use Microsoft's newly launched search engine, Bing, (See: Microsoft to unveil new search engine next week) on its web portal, and take exclusive charge of search-related ads for both companies, and retain 88 per cent of the revenue for the first half of the 10-year deal.

At the outset, many would think that it is not a big deal, but Yahoo and Microsoft have a tough job on their hands to persuade regulators in the US and EU to approve the deal, specially since Microsoft has been derided as a monopolistic wolf whom global regulators seem determined to cut to size.

According to ComScore, Google has a 65-per cent market share in the US and 68.6 per cent globally., Yahoo's market share is 19.6 per cent in the US and 9 per cent worldwide, while Microsoft has 8.4 per cent and 2.7 per cent.

Yahoo and Microsoft would have a combined market share of 21.4 per cent in the US and 11.7 per cent globally.