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Google troubled by Microsoft move

Google has said it finds Microsoft's $44.6bn (£22.65bn) bid to buy rival Yahoo "troubling" and wants regulators to scrutinise the proposed deal.

In a blog, Google said the tie-up could unfairly limit the ability of consumers to freely access competitors' email and instant messaging services.

It said Microsoft had previously sought "to establish proprietary monopolies".

Microsoft made an unsolicited offer for Yahoo on Friday, and Yahoo has said it is considering the proposal.

Microsoft's hostile bid for Yahoo raises troubling questions
David Drummond, chief legal officer Google

Microsoft's Kevin Johnson said that the combination of the two companies would create an entity that could better compete with Google.

"Today the market [for online search and advertising] is increasingly dominated by one player," he said.

But that view is not held by the top executives at Google.

'Underlying principles'

"Microsoft's hostile bid for Yahoo raises troubling questions," said David Drummond, Google's senior vice president for corporate development and chief legal officer.

"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," he said in a company blog.

Mr Drummond suggested Microsoft may attempt to exert an "inappropriate... influence" over the internet.

"While the internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies - and then leverage its dominance into new, adjacent markets," he said.

In 2004 the European Commission fined Microsoft 497m euros for abusing its market dominance, a ruling the US company finally lost on appeal in September last year.

The Commission has since launched two new competition inquiries against Microsoft.

Members of the US Congress Judiciary Committee will scrutinise the bid on 8 February.

Rebuff?

Reports said Yahoo would consider an alliance with Google as one way to fend off Microsoft's bid.

The Wall Street Journal reported on Sunday that Google's chief executive Eric Schmidt called his counterpart at Yahoo, Jerry Yang, to offer his company's help in any efforts to rebuff Microsoft.

Google's efforts aside, analysts say a bidding war for Yahoo looks unlikely given Microsoft's deep pockets.

Microsoft's proposed bid, unveiled in a letter to Yahoo's board on Friday, is 62% above Yahoo's closing share price on Thursday.

Time Warner, News Corporation, AT&T and Comcast are some of the firms that are often named prospective suitors for Yahoo.

But, according to the New York Times, none of these companies have begun work on any rival bids.

Source: BBC