By Steve Ragan Feb 4, 2008, 10:22 GMT
There is more news and speculation on the Microsoft-Yahoo front. Google has now made their stance known, and Microsoft answered with the same spin that was to be expected. From the start Yahoo has remained at the center of the merger debate and hype. The number two player in the online advertising game, Yahoo has only said they would consider the offer from Redmond Washington.
There is more news and speculation on the Microsoft-Yahoo front. Google has now made their stance known, and Microsoft answered with the same spin that was to be expected. (Photo: J. Anderson)
“The Yahoo Board is undertaking a deliberate review process. They’re going to take time to thoroughly evaluate the proposal in the context of Yahoo's strategic plans. This will include evaluating all of the Company’s strategic alternatives – including maintaining Yahoo! as an independent company. That process will take some time, but the Board will ultimately pursue the option that it believes can best maximize value for our shareholders,” a Yahoo statement said.
According to a new report by Reuters, the “deliberate review process” might even include entertaining proposals from the number one company in the online advertising market, Google. An inside source told Reuters that the Internet giant is considering past offers form Google, revisiting the talks held several months ago. Part of the reason for the possible alliance with Google the source said, was the bid made by Microsoft seriously undervalued company. Microsoft's proposal to the Yahoo Board of Directors offered to acquire all the outstanding shares of Yahoo common stock for just about $31 per share, roughly $44.6 billion.
On Sunday, David Drummond, Senior Vice President of Corporate Development and Chief Legal Officer at Google said, “…While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.”
“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?” he added later.
Reuters and several others online analysts are all saying that because Google so dominates the online search and advertising markets, antitrust regulators are unlikely to stop the merger if it were to happen. Evan Stewart of Zuckerman, Spaeder LLP told Reuters that because of the changes in IT, and the growth of Google it is hard to see how, “…they (regulators) could reject this.” That will not stop some groups such as the Center for Digital Democracy (CDD) and the Electronic Privacy Information Center (EPIC) from trying to halt the deal. CDD has said it will press the U.S. Department of Justice, the Federal Trade Commission and Congress to “scrutinize this deal and impose the needed safeguards for it -- and the industry,” according to an interview with IT World by Jeffrey Chester, CDD's executive director.
“In an era when individuals are increasingly conducting their personal, social and political lives online, the corporations that control the digital experience will have a far-reaching influence over every aspect of society," he said. "Consumers will be more vulnerable to having their personal information become the property of the GoogleClick's and Microhoo's,” Chester added.
Another glitch for Microsoft would be the European Union. According to one antitrust lawyer, “If the deal allows Microsoft to take components of Windows online, and in the process increases Microsoft's dominance of the market for PC operating systems then the European Commission would have to prohibit the deal.”
Professor Joseph Turow, at University of Pennsylvania School of Communication has made a comment that mirrors many of the insiders watching the developing merger. Speaking to IT World he said, “Microsoft's decision to buy Yahoo is a direct result of the decision by the FTC to allow Google to purchase DoubleClick. It is further evidence that despite the appearance of unlimited choice in the new media environment, people's activities will be tracked and shaped by a very small number of companies who care far more about surveillance and targeted advertising than the public interest.”
Now that the lines are drawn, and several sides are weighing in, it is anyone’s guess as to what happens next. It is clear however, that this is not a simple hostile take over. For the record, Microsoft stands behind the statement made by 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. The alternative scenarios only lead to less competition on the Internet.”
“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.”
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