WebProNews

Bottom line - Yahoo's getting a rich payday

Google would like to see Yahoo stay out of Microsoft's embrace for competitive reasons, but Microsoft's top lawyer says there's no problem here.

Google's top legal eagle Dave Drummond raised the specter of Microsoft's bad-boy past in commenting on the potential of a Microsoft-Yahoo deal. The monopolistic practices of Microsoft's past make Google think the Yahoo deal gives Microsoft a chance to do to the Net what they have done to the PC market.

Drummond's counterpart at Microsoft, general counsel Brad Smith, fired back at claims that the deal creates a less competitive market on the Internet:

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.

If Google can thwart the acquisition from going through, they will try to do so. The Wall Street Journal said Google CEO Eric Schmidt contacted his Yahoo counterpart, Jerry Yang, and offered to help in any way possible.

We find that offer interesting, given Google's dominant position in search and advertising. Their success developed the climate that weakened Yahoo's business, and a Google counter-offer may trip the same antitrust warnings in Washington that Google believes a Microsoft offer should.