Microsoft-Yahoo-Google: The vicious antitrust circle
Within minutes of Yahoo announcing it was going to do an AdSense for Search deal with Google, Microsoft began firing the antitrust warning shots.
It took about 15 minutes after I saw the Yahoo press release before I got an e-mail from the Microsoft camp reminding me that any kind of Google-Yahoo partnership would be frowned upon by the authorities.
(Microsoft must have been saving up this list for a rainy day -- just in case Google actually made motions to bail out Yahoo. And remember: In Seattle, at least for nine months a year, almost every day is a rainy day. Here are the excerpts Microsoft sent me:
Approval Unlikely For Google-Yahoo Pact: Experts Competition Law 360, February, 4, 2008
“Google and Yahoo really cannot form an alliance — that is the whole purpose of antitrust law — to prevent the biggest competitors in the market from aligning to the detriment of consumers. If the question is whether Google and Yahoo can collectively set the rates of online advertising, that is a complete no-no under antitrust law, That sounds a lot like blanket price-fixing, which is per se illegal under Section One. That is the simplest of all cases.” -- Marc Edelman, Professor (Antitrust), New York Law School
“It would be seen as worse than the Microsoft acquisition of Yahoo, which at least can be viewed as No. 2 plus No. 3 to compete more successfully against No. 1. A Google acquisition of Yahoo would merely entrench Google in a dominant position.” -- Albert Foer, American Antitrust Institute
The Perils of a Google-Yahoo Blocking Move The Wall Street Journal Deal Journal, Matthew Karnitschnig, February 8, 2008
If Jerry Yang is seriously considering cutting some kind of deal with Google to stave off Microsoft, he’d better make sure he’s got a good stable of lawyers.
“Google has more than 50% of the search advertising market,” says Gary Miller, a corporate attorney with Eckert Seamans in Philadelphia. “I can’t see the regulators allowing someone with 50% to take over the No. 2 or No. 3. It’s a non-starter.” -- Gary Miller, Eckert Seamans, Corporate Attorney
Yahoo weighs outsourcing search ads to Google San Francisco Chronicle, Verne Kopytoff, February 9, 2008
Antitrust concerns also swirl around any Yahoo-Google partnership. Regulators would think twice about allowing Google, the most popular search engine, to add to its already sizable lead in the search advertising market.
"I think it would definitely raise regulatory concerns," said Richard Idell, an attorney with Idell & Seitel, a San Francisco law firm. "You would have this one consolidated entity that is controlling the vast majority of the market share." -- Richard Idell, Idell & Seitel, attorney
Yahoo Expected to Reject Microsoft’s Takeover Bid New York Times, Andrew Ross Sorkin and Miguel Helft, February 10, 2008
Legal analysts said the board's deliberations were complicated by the fact that both of its most talked-about options could face antitrust objections. Google has already raised potential antitrust issues about a Microsoft-Yahoo tie-up. A Google-Yahoo partnership in search advertising could have "even bigger antitrust implications," -- Carl Tobias, law professor at the University of Richmond in Virginia
Yahoo Considers Playing a Google Defense The Wall Street Journal, Kevin J. Delaney and Matthew Karnitschnig, February 9, 2008
But antitrust experts say even such a pact with Google would likely raise red flags with regulators because of Google's and Yahoo's large shares of the Web-search and search-advertising markets.
Yahoo looks to raise its game in the UK Media Week, By Andrew McCormick, April 1, 2008
"The Microsoft bid for Yahoo is about creating a viable competitor to Google. On this basis, we don't have a problem with the proposed takeover. There has been some talk of Yahoo seeking to see off the bid by outsourcing its search to Google - we would most definitely have a problem with this." --Nigel Gwilliam, Head of Digital at the Institute of Practitioners in Advertising
Would The FTC Block A Google Deal With Yahoo? Barron’s, Eric Savitz, February 7, 2008
Meanwhile, investors may be overlooking the potential regulatory scrutiny Yahoo would get from an oft-cited rescue strategy: outsourcing search to Google (GOOG). In a research note this morning, UBS analyst Heather Bellini summarizes a conference call she hosted yesterday with Glenn Manishin, a litigation attorney and partner and the law firm Duane Morris.
Manishin notes that the Federal Trade Commission has the authority to review any agreement, even if it does not involve M&A. And his view, according to Bellini, is that “such a deal probably would not be approved because of Google’s existing very significant search share.” She writes that Manishin believes “an agreement between Yahoo and Google would be much more problematic than a deal between Yahoo and Microsoft.”-- Heather Bellini, UBS analyst and Glenn Manishin, Duane Morris, litigation attorney and partner
Yahoo’s last stand Financial Times Lex Column, February 10, 2008
Yahoo could threaten to outsource its search advertising to Google to boost profitability. Such an agreement would put the wind up Microsoft, potentially forcing it to raise its bid. The trouble is, if Yahoo thinks that being bought by Microsoft has a serious anti-trust risk, such a deal with Google looks even more tenuous.
Yahoo Board to Determine Fate Of Company Today Techcrunch, Michael Arrington, February 8, 2008
“…There is also the strong likelihood that any deal reached between Yahoo and Google would be rejected by U.S. regulatory authorities.
Obviously, there are no mentions in the citations from Microsoft of authorities rejecting a Yahoo-Microsoft tie-up... which you can bet Google (and probably Yahoo) would do everything in their power to make sure happened.
Is a Microsoft-Yahoo merger any more/less potentially anti-competitive than a Yahoo-Google outsourcing partnership?