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NYU Stern Professors to Offer Analysis of Microsoft's Bid for Yahoo!

Posted on: Friday, 8 February 2008, 15:00 CST

NYU Stern School of Business Professor of Economics Nicholas Economides, an expert on antitrust, network industries, and the new economy, who submitted an Amicus brief in favor of the settlement between the U.S. Department of Justice and Microsoft, doubts there will be anti-competitive concerns with the possible Microsoft-Yahoo! merger.

He argues:

Because of Google's dominance in Internet search, the combination of the second (Yahoo!) and third (MSN) search engines will enhance rather than hurt competition.

The large market shares of Yahoo! and Microsoft in Instant Messaging (IM) and in free email are not likely to create antitrust difficulties in the merger.

Despite the European Union's recently announced investigation of Microsoft on bundling, the EU is not likely to stop this merger.

The merger is complementary in other activities of the two companies, such as in mobile phones.

NYU Stern Professor of Information, Operations and Management Sciences Arun Sundararajan, a research expert in the economics and implications of information technology, contends that Microsoft's takeover bid for Yahoo! is more than a marriage of search engines -- it's about competing for dominance over the future of both consumer and enterprise computing.

He argues:

Combining Microsoft's ownership of the traditional PC market with Yahoo's sophistication in the online consumer world could create a single company poised to win in the emerging world of consumer computing that is increasingly moving off the desktop and onto the Internet.

Adding Yahoo's extensive expertise in the Internet technology realm positions Microsoft to dominate the enterprise market in the coming decades.

The combined company will be the dominant provider of e-mail -- Yahoo! Mail and Microsoft's Hotmail are the two most popular such services -- and have a substantial combined presence in a myriad of other online properties.

About Professors Economides & Sundararajan

Professor Economides has published and consulted extensively on the economics of network industries. His website on the "Economics of Networks" at http://www.stern.nyu.edu/networks/ has been ranked in the top four websites on economics worldwide by The Economist.

Professor Sundararajan regularly consults with technology companies on how to formulate strategy and business models in industries transformed by information technology, and has published extensively on the economics of social networks, network effects and digital goods.

To arrange an interview with Professors Economides and Sundararajan, please contact them directly at: Professor Economides, (917) 776-8777 (cell phone), economides@stern.nyu.edu; Professor Sundararajan, (212) 998-0833, arun@stern.nyu.edu; or call Jenny Owen in NYU Stern's Office of Public Affairs at (212) 998-0561.

Source: Business Wire

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