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2/3/2008
11:07 PM
Eric Ogren
Eric Ogren
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Google, Microsoft Trade Jabs Over Yahoo

Google issued a statement speaking out against the proposed Microsoft acquisition of Yahoo over the weekend, citing antitrust and competitive concerns. Later, Microsoft fired back, saying that a combined Microsoft/Yahoo could serve as a better, stronger Number Two in the market to Google's Number One. Nice of Microsoft to admit that Google has the superior position. But is Google quaking in it

Google issued a statement speaking out against the proposed Microsoft acquisition of Yahoo over the weekend, citing antitrust and competitive concerns. Later, Microsoft fired back, saying that a combined Microsoft/Yahoo could serve as a better, stronger Number Two in the market to Google's Number One. Nice of Microsoft to admit that Google has the superior position. But is Google quaking in its boots?The words couldn't be any plainer. Google Chief Legal Office David Drummond penned a statement and posted it on Google's Web site. It read, in part, "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."

Drummond continues, "[Microsoft's $44.6 billion 'hostile' bid] for Yahoo raises troubling questions. Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies--and then leverage its dominance into new, adjacent markets. Could the acquisition of Yahoo allow Microsoft--despite its legacy of serious legal and regulatory offenses--to extend unfair practices from browsers and operating systems to the Internet?"

Yahoo and Microsoft have a majority share of the world's email accounts. Google's Gmail ranks far below Hotmail, MSN and Yahoo when it comes to the numbers. Conversely, Google has the lion's share of the world's paid (75%) and un-paid (66%) search markets.

I find it interesting that Google even took the time to respond so publicly. Sure, Google has more to lose than any other company if MircoHoo becomes a reality, but it must really be feeling the heat to bring up the antitrust argument.

Microsoft feels it is on solid ground, and responded. "The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising," said Microsoft lawyer Brad Smith in a prepared statement. "The alternative scenarios only lead to less competition on the Internet."

Google went so far as to speak with Yahoo directly, and offered a partnership to avert a Microsoft takeover. Neither company would comment on the exact details of the phone call made by Google CEO Eric Schmidt.

The future of the Internet is at stake, here. How this works out is more important than one company simply taking over another. It will shape the Internet for years to come.

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