Google Works To Derail The Microsoft/Yahoo! Deal
Monday, February 04, 2008SUSIE GHARIB: Google wants to derail Microsoft's $45 billion bid for Yahoo! The search giant is reportedly talking to Yahoo! about how it can help thwart Microsoft's unsolicited bid through a possible business tie-up and as Stephanie Dhue reports, Google is also complaining that a Microsoft- Yahoo! combination would be anti-competitive.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Google is playing the role of regulatory underdog. In a blog post, Google says Microsoft and Yahoo! could unfairly limit consumers' ability to freely access competing e-mail, instant messaging and web-based services. The complaint may also be payback for Microsoft's objection to Google's merger with Doubleclick. Analyst Blair Levin says with 75 percent of the market for paid search, Google risks protesting too much.
BLAIR LEVIN, ANALYST, STIFEL NICHOLAS: They are clearly dominant in the Internet search advertising space and what this deal creates is arguably a stronger competitor. And the more they object, the more it makes it look like what they're really objecting to is having a stronger competitor.
DHUE: Industry watchers think Google may also try to deter a deal by offering Yahoo! guaranteed revenue in return for handling its search function. But Stanford Group analyst Paul Gallant says Google will have to tread carefully if it tries to steer Yahoo! away from Microsoft.
PAUL GALLANT, ANALYST, STANFORD WASHINGTON RESEARCH: The antitrust laws basically say any contract or combination in restraint of trade is illegal, so if Google were to make some kind of deal with Yahoo! directly or if Google were to make a deal with somebody else that kept Yahoo! out of Microsoft's arms, regulators would be very interested to see whether that deal involving Google was designed to prevent more competition to Google.
DHUE: But Microsoft's biggest problem may be its own history. It is a convicted monopolist both in the U.S. and in Europe. Levin says a Microsoft Yahoo! deal will face its biggest hurdle with European regulators.
LEVIN: They've been having a long-running battle with the European Union over various elements of how they bring on new products to their operating system. So here they are talking about essentially bringing on a whole new product stream, Yahoo! services and the European Union is going to be very sophisticated about potential dangers for competition.
DHUE: U.S. lawmakers are also considering the potential dangers to competition. On Friday, the House Judiciary Committee will scrutinize Microsoft's bid for Yahoo! Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
