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Google seeks to scuttle Microsoft's Yahoo bid
 
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February 04, 2008 18:16 IST
Last Updated: February 04, 2008 18:35 IST

Online search giant Google has come out openly against Microsoft's $45-billion takeover bid for Yahoo, terming the deal as a threat to openness of the Internet.

Google's chief legal officer and senior vice-president (corporate development) David Drummond said in a statement that "openness of the Internet is what made Google -- and Yahoo! -- possible."

But, Microsoft's Yahoo bid raises "troubling questions" in relation to the preserving openness and innovation - two underlying principles of the Internet, Drummond said in a statement posted on the official blog of Google.

Meanwhile, Wall Street Journal reported that Google CEO Eric Schmidt has called on Yahoo CEO Jerry Yang to offer his company's help in any effort to thwart Microsoft's bid.

Drummond said that Microsoft had often tried to establish proprietary monopolies and questioning whether it would seek to exert same sort of inappropriate and illegal influence over the Internet that it did with the PC.

Reacting to it, Microsoft's General Counsel Brad Smith said, "Microsoft is committed to openness, innovation, and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo! will advance these goals."

Microsoft-Yahoo combination would create a more competitive market by establishing a compelling number-two for Internet search and online advertising and alternate scenarios only lead to less competition, he added.

The Microsoft official said that Google, the dominant search engine and advertising company on the Web, has amassed about 75 per cent of paid search revenues worldwide and its share continues to grow.

"According to published reports, Google currently has more than 65 per cent search query share in the US and more than 85 percent in Europe. Microsoft and Yahoo! on the other hand have roughly 30 per cent combined in the United States and approximately 10 per cent combined in Europe," Smith said.

Yahoo has said that its board of directors would mull over the offer and would come with a response in due course.

According to industry experts, Yahoo might look for a better valuation as it believes that $44.6 billion offer does not take into account its stakes in other companies such as China's Alibaba.com.

Quoting people familiar with the matter, the Wall Street Journal report said that the approach was made on Friday. The report said that it was unlikely that Google would itself bid for Yahoo because of anti-trust regulatory concerns, but Google could play a role in attempts by others to outbid Microsoft, or by Yahoo to remain independent.

"Google could potentially offer money, or guaranteed revenue in return for a Yahoo advertising outsourcing pact, under that scenario," the report said.

Earlier, in an analysts' conference last week, Microsoft's General Counsel Brad Smith had said about possible interest by other companies in Yahoo that "any number of companies might have an interest. I think there is really one company that cannot. That is Google itself."

"Given that Google has roughly a 75 per cent market share worldwide for online page search, they are not in a position to do this. Given its super dominant market share, Google is clearly prevented by the anti-trust laws from buying Yahoo! or buying this business from Yahoo," Smith said.


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