General Business

Menage � Trois: Microsoft, Yahoo, Google

Nothing but love and antitrust

By Marius Oiaga, Technology News Editor

10th of April 2008, 07:56 GMT

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With the February 2008 $44.6 billion marriage proposal, Microsoft showed Yahoo some tough love, at the end of almost two years of failed private takeover negotiations. The Sunnyvale Internet giant, seen as the only way for the Redmond company to grow its online search and advertising business in the Google near-monopoly, rejected Microsoft's initial bid, calling it unsolicited and revealing that it

considers not to reflect accurately the value of Yahoo. The early stand-off between Microsoft and Yahoo has now evolved with Google in the mix, and is transforming into a menage � trois, but definitely not a love triangle, with love being the key word.

The past week, Microsoft Chief Executive Officer Steve Ballmer gave Yahoo a three-week ultimatum to agree to the takeover. CEO Jerry Yang replied that Yahoo was open to negotiations and that it expected Microsoft to cough up more money than $31 per share. And in a recent move, Yahoo appears to be embracing Google by debuting a test of the Mountain View-based search giant's AdSense for search service.

Google's online search and advertising infrastructure produces more money than Yahoo's and, in this context, the move of the Sunnyvale Internet company is essentially a gasp for air, and for a boost in revenues that would keep it either outside of Microsoft's reach or that will make the Redmond company sweeten the $44.6 billion offer. However, the first reaction from the Redmond company was to come up with its antitrust guns firing in criticizing a potential Yahoo-Google alliance.

"Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers," commented Brad Smith, Microsoft's General Counsel.

TAGS:

Microsoft | Yahoo | Google | Steve Ballmer | Jerry Yang

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