Microsoft – Yahoo! nightmare gives Google sleepless nights

04 February 2008

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.