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Google Cries Foul Over Microsoft's Bid for Yahoo

Posted on: Sunday, 3 February 2008, 19:05 CST

Google's chief lawyer said Sunday that Microsoft's $44.6 billion bid for Yahoo raises troubling questions that need to be answered, including whether the combined companies would exert the same "inappropriate and illegal influence over the Internet that (Microsoft) did with the PC.'

David Drummond's statement is Google's first official response to the takeover attempt announced Friday, and it signals Google's willingness to lobby antitrust regulators in the United States and Europe to block one of the largest deals in the history of the Internet.

"This is about more than simply a financial transaction," Drummond wrote in a post on the Offical Google Blog on Sunday morning. "It's about preserving the underlying principles of the Internet: openness and innovation."

Drummond noted that Microsoft and Yahoo together provide the majority of Internet users with e-mail and instant messaging services and urged policy makers to examine whether that would amount to far too much influence over the Internet.

Microsoft quickly responded with a statement from its chief lawyer, Brad Smith: "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,' Smith said. "The alternative scenarios only lead to less competition on the Internet.'

According to comScore, Google currently handles 58 percent of all Internet searches in the United States, while Microsoft and Yahoo together handle 33 percent. Smith said Google's share is even greater in Europe, where he said it handles 85 percent of searches compared to 10 percent for Microsoft and Yahoo.

'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.'

Microsoft and Google have increasingly used antitrust law as a competitive weapon against each other, requesting the support of regulators in the United States, Europe and around the world. Last year, Microsoft joined public interest groups in calling for antitrust scrutiny of Google's $3.1 billion bid to acquire DoubleClick.

"This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online,' Smith said in April 2007.

Meanwhile, in 2006, Google complained to U.S. regulators about the default search settings on Microsoft's new Internet Explorer 7 browser.

Antitrust regulators have so far appeared reluctant to crack down on Google. In December the U.S. Federal Trade Commission voted 4-1 to allow the DoubleClick deal to proceed, though two commissioners expressed concerns about its potential effect on privacy and competition. A decision by the European Commission is expected by April 2.

Meanwhile, European regulators have demonstrated a special animus toward Microsoft. In January, the European Commission opened a new antitrust investigation of Microsoft just months after Microsoft conceded failure in another European antitrust battle that had lasted a decade.

The new investigation responds to complaints lodged by ECIS, the European Committee for Interoperable Systems. Members of ECIS include Adobe Systems, Corel, IBM, Linspire, Nokia, Opera, Oracle, RealNetworks, Red Hat and Sun Microsystems.

In October, Microsoft agreed to settle the decade-long battle and comply with findings of the European Union's antitrust regulator to provide more information to open-source software developers who want to write programs for Microsoft's servers, which are used by businesses and other large organizations.

Five years earlier, Microsoft settled an antitrust case brought by the U.S. Department of Justice that accused the software maker of abusing its operating system monopoly to restrict market for Web browsers. Microsoft previously settled similar allegations with the DOJ in 1994.

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Source: San Jose Mercury News

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