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 user 2008-02-04 at 11:18:00 am Views: 62
  • #19347

    Google: Microsoft Deal Bad for Internet
    FRANCISCO FEB 08 – Google  Inc. raised the specter of Microsoft  Corp.
    using its proposed $42 billion acquisition of Yahoo  Inc. to gain
    illegal control over the Internet, underscoring the online search
    leader’s queasiness about its two biggest rivals teaming up.The
    critical remarks, posted online Sunday by Google’s top lawyer,
    represented the Mountain View-based company’s first public reaction to
    Microsoft’s unsolicited bid for Yahoo since the offer was announced
    Friday.”Microsoft’s hostile bid for Yahoo raises troubling questions,”
    David Drummond, Google’s chief legal officer, wrote. “This is about
    more than simply a financial transaction, one company taking over
    another. It’s about preserving the underlying principles of the
    Internet: openness and innovation.”Google’s opposition isn’t a
    surprise, given that Microsoft views Yahoo as a crucial weapon in its
    battle to gain ground on Google in the Internet’s booming search and
    advertising markets.

    Redmond, Wash.-based Microsoft has been
    trying to depict a Yahoo takeover as a boon for both advertisers and
    consumers because the two companies together would be able to compete
    against Google more effectively.But Google is painting a starkly
    different picture, asserting that Microsoft will be able to stifle
    innovation and leverage its dominating Windows operating system to set
    up personal computers so consumers are automatically steered to online
    services, such as e-mail and instant messaging, controlled by the
    world’s largest software maker.In a move that illustrates just how
    badly Google wants to torpedo the deal, Google Chief Executive Officer
    Eric Schmidt  called Yahoo CEO Jerry Yang Friday to offer his help in
    repelling Microsoft, according to a report Sunday on The Wall Street
    Journal’s Web site, which cited anonymous people familiar with the
    matter.The assistance didn’t include a counterbid, but may have
    included supporting other potential suitors, or a revenue guarantee in
    exchange for an ad partnership with Yahoo, the people said, according
    the newspaper.

    AT&T  Inc., Time Warner  Inc. and News Corp .
    aren’t planning to enter the bidding, the Journal said, citing the
    people familiar.To help make its point, Google pointed to the way
    Microsoft previously used Windows to help extend the reach of its Web
    browser and other applications – a strategy that triggered a U.S.
    Justice Department lawsuit alleging the software maker illegally used
    its operating system to stifle competition. The dispute ended with a
    2002 settlement that required Microsoft to abandon some of its past
    practices.”Could Microsoft now attempt to exert the same sort of
    inappropriate and illegal influence over the Internet that it did with
    the PC?” Drummond wrote.Brad Smith, Microsoft’s general counsel, said
    preventing Microsoft from buying Yahoo would undermine competition by
    allowing Google to become even more dominant than it already is on the
    Internet”Microsoft is committed to openness, innovation, and the
    protection of privacy on the Internet,” Smith said. “We believe that
    the combination of Microsoft and Yahoo!  will advance these goals.”

    they get together, Microsoft and Yahoo would have about 16 percent of
    the worldwide Internet search market – still far behind Google’s 62
    percent share, according to comScore Media Metrix. But Microsoft and
    Yahoo already are far bigger in than Google in e-mail and instant
    messaging, and conceivably would be in a better position to squash
    rival services if they combined.Illustrating the enormous stakes
    involved in a deal that could reshape the technology and media
    industries, Google and Microsoft are already debating the pros and cons
    before Yahoo has responded to the offer.Yahoo so far has little to say
    except that its board will carefully examine Microsoft’s bid – a
    process that “can take quite a bit of time,” according to a message
    posted on the Sunnyvale-based company’s Web site.

    The review
    “will include evaluating all of the company’s strategic alternatives,
    including maintaining Yahoo as an independent company,” Yahoo said on
    its Web site.Most analysts believe Yahoo will have little choice but to
    sell to Microsoft, with its stock price near a four-year low at the
    time of the bid and its profits falling since late 2006. When it was
    first announced, Microsoft’s offer was 62 percent above Yahoo’s market
    value – a premium analysts doubt any other suitor will be able to
    top.If Yahoo accepts, antitrust regulators in both the United States
    and Europe are expected to begin an exhaustive review that some experts
    think could last a year. Microsoft believes it could get the necessary
    approvals to take over Yahoo late this year.

    If nothing else,
    Google probably will try to raise enough alarms about the
    Microsoft-Yahoo deal to delay its approval for as long as possible. By
    doing so, Google would have more time to draw up plans to counteract
    the combination.Google also is borrowing a page from Microsoft’s book
    by urging antitrust regulators to take a hard look at the proposed
    marriage between its two rivals.Just days after Google struck a $3.1
    billion deal to buy online ad service DoubleClick Inc. last year,
    Microsoft began lobbying regulators to block the transaction. U.S.
    regulators blessed Google’s DoubleClick acquisition late last year
    after an eight-month review, but the antitrust inquiry in Europe
    remains open.