Google Raises Competition Questions Over Microsoft/Yahoo! Deal

Google has said that Microsoft’s $44.6 billion bid for Yahoo! raises “troubling questions” about the underlying principles of the internet.

Writing on the official Google blog, David Drummond, Google’s chief legal officer, said that “Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the internet.”

He said: “Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, IM, and web-based services? Policymakers around the world need to ask these questions – and consumers deserve satisfying answers.”

However, David Mitchell, SVP IT research at Ovum, said: “The combined Microsoft and Yahoo! business is still likely to be a much smaller player than Google, although they will have substantially improved their ability to compete.

“The additional volume of subscribers that Yahoo! brings to Microsoft will allow increased scale and distribution volumes to be delivered. However, Google still represents a formidable opponent for even the combined Microsoft-Yahoo! entity to tackle.”

It has also emerged that Yahoo! and Google could restart talks held last year about ways to work more closely together.

It is almost certain that a takeover bid for Yahoo! from Google would be rejected owing to competition concerns.

It was revealed on Friday that Microsoft had made a bid for Yahoo! (see Microsoft Offers To Buy Yahoo! For $44.6bn), which if it were to go through would be the largest ever takeover in the technology sector.

Last week Yahoo! announced that its Q4 profits fell 23% to $206 million, down from $269 million a year earlier, and confirmed plans to make 1,000 job cuts, its first cuts in six years (see Media In The City: Microsoft Makes Move On Yahoo!).

Richard Firminger, regional sales director, Northern Europe, at Yahoo!, will join the panel at MediaTel Group’s ‘Future of Online’ seminar in London next week, where the current news surrounding the company will no doubt be discussed, as well as other issues facing the sector in general (see ‘Future Of Online’ Line-Up Finalised).

Yahoo!: 020 7808 4200 www.yahoo.co.uk Google: 020 7031 3000 www.google.co.uk