By Jason Simpkins
Associate Editor
Google Inc. (GOOG) didn't waste any time before weighing in on Microsoft Corporation's (MSFT) takeover bid for Yahoo! Inc. (YHOO). Google officials lashed out against Microsoft's supposed motives yesterday [Monday], and even offered to help Yahoo! rebuff the takeover through a partnership of its own.
"While the internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies - and then leverage its dominance into new adjacent markets," Google's top lawyer, David Drummond said in a posting on the company's blog.
The International Herald Tribune cited sources familiar with Google's operations as saying that company lobbyists are already appealing to lawmakers in Washington in an effort to stall or derail the deal.
Google Chief Executive Eric Schmidt also reportedly made a call to Yahoo's CEO Jerry Yang and offered his company's assistance in fending off the bid. Several other Google executives made "back channel" calls to companies such as Time Warner Inc. (TWX), owner of AOL, to determine whether a rival bid was planned.
Few analysts believe a bidding war with Microsoft is likely because the company has such deep pockets. Microsoft had $21.1 billion in cash and short-term investments as of Dec. 31. The company may be forced to borrow money for the first time ever to finance its proposed $44.6 billion takeover. Microsoft has proposed paying half of the offer with stock and the other half with cash.
Still, Yahoo insists that it has received calls from a number of suitors over the weekend. A tie-up between Google and Yahoo is not out of the question either. Talks between the two search engines stalled last year, but Yahoo may find more favorable terms if it aligns itself with its former rival now that Microsoft is in play.
Microsoft has done its best to deflect criticism.
"The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising," Microsoft's general counsel, Bradford L. Smith, said in a statement.
It's a fair point considering Google drew 56% of U.S. web search traffic in December, nearly double the combined share of Yahoo and Microsoft, which attracted 18% and 13% of the market, respectively.
However, Microsoft's reputation as a borderline industry thug is working against it.
"Google can tap into all of the ill will that Microsoft has created in the last couple of decades on the antitrust front," Eric Goldman, director of the High-Tech Law Institute at Santa Clara University School of Law told IHT.
But Microsoft isn't the only company accused of antitrust issues. Google did its share of feather rousing last April when it bid $3.1 billion for online advertising specialist DoubleClick.
"This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online" Microsoft's Smith said in a statement. "We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market."
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A chronology of events leading up to Microsoft Corp.'s rich offer for Web search and advertising competitor Yahoo Inc. Microsoft sees the deal as a way to catch up with market leader Google Inc., by far the best at turning Web searches into cash. |
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Source: The Associated Press |
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Here are the top five technology deals involving Silicon Valley companies over the past five years, including Friday's proposed acquisition of Yahoo by Microsoft.
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RECENT BIG TECH DEALS IN SILICON VALLEY |
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DATE/DEAL VALUE |
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TARGET |
ACQUIRER |
ANNOUNCED (BILLIONS) |
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Yahoo |
Microsoft |
Feb. 2008 $44.6¹ |
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Veritas Software |
Symantec |
Dec. 2004 $13.7 |
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PeopleSoft |
Oracle |
June 2003 $8.4 |
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BEA Systems |
Oracle |
Oct. 2007 $6.8 |
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Mercury Interactive |
Hewlett-Packard |
July 2006 $4.4 |
Footnotes: (1.) Value When Announced.
Sources: Bloomberg News, San Jose Mercury News, Money Morning Research.
[For further analysis on Microsoft Corp's attempted takeover of Yahoo Inc click here]
News and Related Story Links:
- International Herald Tribune:
Google offers Yahoo help to deflect Microsoft's bid
[…] [Editor's Note: For the latest developments in the Microsoft-Yahoo buyout battle – including Google's potential intervention – in today's issue of Money Morning, please click here]. […]