Microsoft-Yahoo Bid Raises 'Troubling Questions' says Google Exec

Microsoft-Yahoo Bid Raises 'Troubling Questions' says Google Exec

Two days after Microsoft pulled the trigger on a $44.6 billion takeover attempt of search company Yahoo, rival Google is throwing up warning flares that such a deal should spark heavy scrutiny.

A top executive of Google, the world's Number 1 search company, is imploring regulators around the globe to evaluate the deal by asking a number of critical questions about its potential fallout.

"The openness of the Internet is what made Google -- and Yahoo! -- possible," Google's top lawyer, Senior Vice President David Drummond, said in a press release published on Google's corporate blog. "A good idea that users find useful spreads quickly. Businesses can be created around the idea. Users benefit from constant innovation. It's what makes the Internet such an exciting place.

"So Microsoft's hostile bid for Yahoo! raises troubling questions," Drummond wrote. "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."

With dominance over the IT industry and Internet at stake, top executives at Google and Microsoft have been at each other's throats over the past several years. Google has attempted to take on Microsoft's dominance in productivity software by launching Google Docs; Microsoft, in turn, is developing Office Live Workspace and its own search, mapping and online advertising businesses. The proposal to take over Yahoo is its boldest move to date against Google.

Microsoft executives said they didn't believe they would have any major regulatory hurdles in buying Yahoo, since Google, they said, dominates the market for Internet search and online advertising.

The statement from Google's Drummond - - the first from a Google executive to respond to Microsoft's unsolicited bid for Yahoo - - shows they are taking a similar stance with respect to Microsoft's market dominance. The proposed Microsoft-Yahoo deal, and the potential raised by their combination, is leading to expectations of a massive battle between Microsoft and Google in the nascent Software-as-a-Service segment.

"Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet?" Drummond wrote. "In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts.

"And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services?" Drummond wrote.

"Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers," Drummond wrote.

For its part, Yahoo said the company's board would take time to consider Microsoft's offer as well as "the best course of action" for shareholders.

Google immediately faced market pressure on Microsoft's announcement alone. On Friday, after Microsoft's announcement, shares of Google on the Nasdaq stock market plunged by more than 8.5 percent.