Google on Microsoft and Yahoo; Microsoft responds

Google has come out in a blog post on the Official Google Blog by David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer, and stated that:

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.

Read the full post here.  Microsoft, of course, rejects Google's arguments.  The New York Times has a good summary of Google's and Microsoft's position:

Google said in a blog post on its Web site that given Microsoft’s anti-competitive conduct in the past and its continued dominance in the technology industry, the proposed transaction could pose threats to “innovation and openness” on the Internet. But Google’s broadly worded concerns lacked detailed claims about the anticompetitive effects of the deal, and the company did not ask federal regulators to take any specific actions at this time.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” asked David Drummond, Google senior vice president and chief legal officer, writing on the company’s blog. “While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies — and then leverage its dominance into new, adjacent markets.”

Yahoo declined to comment. Yahoo has said it is weighing Microsoft’s hostile offer and alternatives.

Bradford L. Smith, Microsoft’s general counsel, said in a statement on Sunday that the deal would create more, not less, competition “by establishing a compelling No. 2 competitor for Internet search and online advertising.” Mr. Smith noted that Yahoo and Microsoft combined would have 30 percent of the United States search market, far less than Google’s 65 percent share.

But Google appears to want to focus the debate, at least in part, on issues other than advertising, where it is dominant. Mr. Drummond noted that the combination of Yahoo and Microsoft would create a company with an “overwhelming share” of the instant messaging and e-mail markets.

“Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ e-mail, IM, and Web-based services?” Mr. Drummond asked. Yahoo and Microsoft also run two of the most heavily trafficked portals on the Internet, Mr. Drummond noted.

Google’s reaction suggests the Internet search giant may be preparing to do its best to derail or delay any merger. If so, the strategy would mirror Microsoft’s own actions with respect to Google’s proposed acquisition of online advertising specialist DoubleClick for $3.1 billion.

Read more here.  Read more about this at Google Watch here, GigaOM here, Mashable here and here, Eight Black here, ReadWriteWeb here, and Ars Technica here.  But my favourite commentary came from TechCrunch's Michael Arrington, whose clearly not feeling the love from Google on this:

Google finally went on the record today regarding the proposed Microsoft/Yahoo deal.

In short, they don’t like the idea of Microsoft and Yahoo being one company. They think it raises “troubling questions” and threatens “the underlying principles of the Internet: openness and innovation.” Microsoft is also vilified as engaging in “inappropriate and illegal influence” and having “legacy of serious legal and regulatory offenses.” They mention, among other things, the overwhelming market share in instant messaging and email, and the large number of page views their respective portals generate.

But 2008 may be the year Google can no longer hide behind the “David v. Goliath” defense with Microsoft. Google is the reason that Yahoo has stumbled so badly, and may be Microsoft’s last hope to be a meaningful player on the Internet over the long run. To put it bluntly, the roles are reversed. Google is now the Goliath, and they’re public whimpering on the acquisition makes them look petty and scared.

The fact is that this deal isn’t about email, IM or even page views. In the places that matter - search share and advertising dollars, Google is slaying everyone. 2007 Google search share: 64%. Percentage of all online ad dollars going to Google in 2007: 40% and growing.

The truth is that Google has become the new Microsoft, and if we want to avoid a repeat of history, we need to allow the formation of a real competitor to keep them honest. Otherwise, all the ills perpetrated on the world by Microsoft in the nineties will likely be repeated again, this time by Google.

When it comes to Google standing up to the FCC and the incumbent wireless carriers to make our life better, I’m behind them 100%. But when the complain about the formation of a new entity that can provide them real competition in the search and online advertising space, I’m not feeling the love.

Read more here.

Comments

[SEO Pune]

I guess we'll just have to wait and see what Microsoft will do that Yahoo couldn't do themselves.

[Clement]

I am one of those people that hate Microsoft's monopolistic tendencies.And for some time, I have been a huge fan of Google but recently, I have been continually put off by them as well. Google is slowly becoming monopolistic as far as life online is concerned.The way they police the Internet leaves a lot to be desired.The October 2008 PageRank crackdown just confirms what I am saying.In essence, Google is now more or less like an "online Microsoft".If Microsoft buys Yahoo! they will give Google a good run for their $$$.Google's empire will be shaken.That is why they are scared. But at the end of it, small search companies and search businesses in general will not benefit from that sort of competition because both Google and Microsoft are monopolistic.They will crack down on anyone who is against their interests.

[Clement]

I am one of those people that hate Microsoft's monopolistic tendencies.And for some time, I have been a huge fan of Google but recently, I have been continually put off by them as well. Google is slowly becoming monopolistic as far as life online is concerned.The way they police the Internet leaves a lot to be desired.The October 2008 PageRank crackdown just confirms what I am saying.In essence, Google is now more or less like an "online Microsoft".If Microsoft buys Yahoo! they will give Google a good run for their $$$.Google's empire will be shaken.That is why they are scared. But at the end of it, small search companies and search businesses in general will not benefit from that sort of competition because both Google and Microsoft are monopolistic.They will crack down on anyone who is against their interests.

[Clement]

In my previous comment, "October 2008 PageRank update" should have read "October 2007 PageRank update"

Thanks