By Steve Ragan Feb 4, 2008, 7:56 GMT
Talk of hostile bids, the loss of innovation and openness, and "serious legal and regulatory offenses," is the focus of Google's response Sunday to the offer made on Friday by Microsoft to acquire Yahoo for $44.6 billion. Microsoft's proposal would allow the Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock. The offer represents a sixty-two percent premium above the closing price of Yahoo! common stock on Jan. 31, 2008.
Talk of hostile bids, the loss of innovation and openness, and "serious legal and regulatory offenses," is the focus of Google's response Sunday to the offer made on Friday by Microsoft to acquire Yahoo for $44.6 billion. (Photo: J. Aderson)
On Sunday, David Drummond, Senior Vice President of Corporate Development and Chief Legal Officer at Google made the first official statement.
"The openness of the Internet is what made Google -- and Yahoo! -- possible. A good idea that users find useful spreads quickly. Businesses can be created around the idea. Users benefit from constant innovation. It's what makes the Internet such an exciting place. So 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."
Drummond goes on to ponder if Microsoft would attempt "…to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?"
"While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets," he points out. "Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet?"
"In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers," Drummond adds.
It is a wonder why he would make those comments. While true, the merger would give them a huge market pull, Google appears to be under valuing their position. They are number one and have such a large and impressive customer base because of those same ideas that users found useful. Simply put, Google has an advertising platform that neither Microsoft nor Yahoo have been able to compete with, one of the major reasons behind the recent offer.
A comment on OS News mirrors those thoughts. "Why are people such idiots? People use Google because it isn't a bloated POS which is laden with... constant annoying advertisements. That is why I use it over Live and Yahoo… I use GMail, Picasa, [and Google] Search etc. all because it is simple, easy to use, multiplatform and reliable. Again, why is it so difficult for Yahoo and Live to produce something that is marginally better?" said user Kaiwai.
Kaiwai makes a good point, business aside Yahoo and Microsoft have both used their names largely to grow their base. While their name did not win completely, money came in to play. Microsoft and Yahoo have both fought all year to gain a solid foothold in the online advertising market. Yahoo, the number two in the advertising game, spent $650 million to acquire Right Media then another $300 million for BlueLithium. Microsoft too spent money in order to compete shelling out $6 billion for aQuantive in August 2007.
Now with this offer, it appears that Microsoft is once again taking the money route and taking advantage of a slow Q4 for Yahoo to twist the knife. Microsoft countered Google's statement shortly after it was released. Attempting to dispel the talk that they are in it only to buy out their rival, saying it is about competition in the marketplace.
"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. The alternative scenarios only lead to less competition on the Internet," said Brad Smith head council for Microsoft.
"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. According to published reports, Google currently has more than 65 percent search query share in the U.S. and more than 85 percent in Europe. Microsoft and Yahoo! on the other hand have roughly 30 percent combined in the U.S. and approximately 10 percent combined in Europe. 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."
Again, exactly like Google, Microsoft leaves out an important issue. The consumers who use these services are why Google is the established leader. The advertising platforms, as well as a series of tools and services people want, are but a few of the reasons why Google is what it is. Microsoft can buy whom they want. While they will win market share and money, the lack of development is where they will ultimately fail.
The war of words is moving forward. Google is on the "free and open" path and Microsoft is doing what it does best reminding people that it is about a more "competitive marketplace."
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