Google says Microsoft bid for Yahoo ‘raises troubling questions’

Source: Exec Digital USA

Date :2/4/2008 9:15:19 AM

After Friday’s announcement of Microsoft’s bid for Yahoo, Google has commented on reports that its search engine rival is steadying itself for a hostile takeover.

David Drummond, Google's chief legal officer, responded to the news by saying that ‘Microsoft's hostile bid for Yahoo raises troubling questions.’

“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,” he said.

Microsoft last week stated that it believed the two companies combined would be better placed to challenge search engine favourite Google. But it also hinted at a hostile bid by reserving the right "to pursue all necessary steps" to win over the firm's shareholders if the deal was opposed.

As a shareholder of Yahoo, Microsoft would be able to nominate executives to be voted on by all shareholders.

Antitrust

While it remains unlikely that Google could stage a bid for Yahoo! itself, largely due to antitrust regulations that would draw into question the combined shares of the search and online advertising markets, analysts believe that it could help Yahoo if it does choose to remain independent.

Google could potentially offer money, or guaranteed revenue in return for a Yahoo advertising outsourcing pact, under that scenario, say people familiar with the matter.

It is likely that even these move would attract attention from regulatory bodies, however.

February 4, 2008