Is the Microsoft-Yahoo Deal Anti-competitive?

    August 24, 2009
    Chris Crum

That Microsoft-Yahoo deal that has been so heavily anticipated since even way before it was announced may not go through as planned. At least that’s what one antitrust lawyer thinks.

Matthew Cantor, a partner with the firm Constantine Cannon LLP, told ComputerWorld that he believes the deal will not get past regulators – at least not as is.

Matthew Cantor"I obviously can’t predict with certainty how the DOJ will react to it, but I think there’s a very good chance it will force [Microsoft and Yahoo] to modify the deal at the very least if they do not block it outright," he said. "Even though it’s a partnership, it will be evaluated like a merger … because Yahoo ceases to be a competitor in search. Yahoo is going to use Bing technology for their sites. I think there’s no question the DOJ will come to the conclusion that the deal is anticompetitive."

The idea that the deal is anticompetitive may sound absurd to many who follow the search industry. Obviously Google is so far ahead of the game with regards to the search market, that there is doubt among some of us that Microsoft and Yahoo combined will even hurt Google significantly.

Still, it’s not as if Microsoft and Yahoo haven’t been able to compete in the literal sense of the word. The people just overwhelmingly prefer Google. Yahoo’s been around longer and Micosoft has been a corporate giant for decades (of course with its own track record of antitrust issues).

"Microsoft will say they need this merger to defend against this giant, Google," Cantor told CW. "That’s not a credible argument. We’re talking about a Microsoft that has more cash resources than almost any business in the world. They’ve spent years and tremendous resources creating Bing, which has gotten great reviews. They weren’t pouring all these millions of dollars into Bing because they think they can’t compete."

You probably recall that last year regulators shut down a proposed search advertising deal between Google and Yahoo for being anticompetitive. Could the same thing happen to Microsoft and Yahoo even though Google basically has the market cornered? Tell us what you think.