February 04, 2008 | Monday
Google reacts to Microsoft’s bid for Yahoo
By Jackie Danicki - Blogger in Display |Marketing |News |Search Engines |Google |Yahoo |Microsoft
David Drummond, SVP of corporate development and chief legal officer for Google, posted the search giant’s only statement so far on Microsoft/Yahoo developments to Google’s official blog on Sunday. As observers immediately pointed out (even on Super Bowl Sunday, there is no rest for the wicked when it comes to deals this big), Google can now get its own back at Microsoft in a big way.
Where? In the regulatory arena, of course.
Microsoft has been making Google miserable for a year over its DoubleClick purchase—and now, with Microsoft trying to buy Yahoo, it’s payback time. That’s the true meaning of top Google lawyer David Drummond’s statement about the Microsoft bid. He’s not saying that the deal is anticompetitive: He’s just asking questions. Expect Google to keep asking, and asking, and asking—all the way up and down Capitol Hill, where [Google] has been steadily building up its lobbying presence. If Microsoft thought its last antitrust battle was torture, it hasn’t seen anything yet.
What could possibly be more delicious for Larry, Sergey, and Eric? Oh, I don’t know...Yahoo rebuffing the Microsoft bid by forming a powerhouse alliance with Google?
Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft’s bid, that source said. At $31 a share, Yahoo believes the bid undervalues the company, two sources said.
A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.
Sure, this could all be a ploy on Yahoo’s part to get Microsoft to sweeten the proposed deal. It could also end in a bit of a legal nightmare for Google if any merger with Yahoo were to be put into play. Microsoft General Counsel Brad Smith, in responding to Google’s blog post on Sunday, said:
Today, Google is the dominant search engine and advertising company on the Web. Google has amassed about 75 percent of paid search revenues worldwide and its share continues to grow.
This echoes a point already made by Microsoft executives on the conference call made Friday after the proposal was announced: If regulators are going to block any company from acquiring Yahoo, it’s more likely to be Google rather than Microsoft.
Spare a thought for poor old AOL in all this. They announce their Q4 earnings on Wednesday, in full glare of the Microsoft-Yahoo news - and that’s not a comfortable place to be for Jeff Bewkes, Time Warner’s chief exec. If the merger happens, that’s goodbye to two potential buyers for AOL, which Bewkes is facing some pressure to offload. If he didn’t, and the deal went through, AOL would be up against even stiffer competition.
Today’s FT reports:
Prior to Microsoft’s announcement on Friday, Time Warner executives had been mulling the possibility of merging AOL into Yahoo, according to a person familiar the matter, leaving it with a minority stake in a larger entity.
If Microsoft and Yahoo combine, then Google would appear to be the best option for AOL. The two companies are well acquainted: Google paid $1bn two years ago for a 5 per cent sake in AOL, and also became its search partner. Proponents of a deal note that AOL could help Google build its display advertising business.
As I noted on Friday, display is no small consideration for Google, Yahoo, or any other players online right now.
Just in case you thought this story couldn’t get any more exciting (or am I the only one whose pulse is quickened by all this? Right, then...), there is also the possibility that Rupert Murdoch could make a bid for AOL. Then we’ll really see the media consolidation conspiracy theories fly!
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