‘That’s unfair! How can Yahoo deal with Google and give Google a whopping 90% of the ad market?’ So said Microsoft in a recent US Senate subcommittee hearing as reported by John Timmer; the deal as had been previously reported would let Yahoo mix ads supplied by Google with its own result pages. The hearing included testimonies from top executives of the two involved along with Microsoft’s lawyer, Brad Smith. The hearing highlighted at how the deal would effect competition in the search market and the negotiations between Microsoft and Yahoo that are currently in progress.
The hearing was started by Herb Kohl, chairman of the Subcommittee on Antitrust, Competition Policy and Consumer Rights; he raised an issue with an opinion that if Yahoo’s deal with Google would do no good to the competition instead transform Yahoo into Google’s subordinate. He was pretty clear at this as he firmly voiced his opinion saying:
reduce Yahoo to nothing more than the latest satellite in Google’s orbit.
However his target wasn’t directed at Yahoo and Google alone; he pointed out at Microsoft’s activities in the 90’s to be such that eliminated competition in every way.
The opinions lay divided in two groups (and why not) as Yahoo’s general counsel, Michael Callahan and David Drummond, Google’s chief legal officer opined that the deal would maintain competition in the market and that Yahoo would utilize the finances from the deal to make itself stronger. As Callahan mentioned:
With all due respect to Google, we have every expectation of fighting them and winning.
The reason they mentioned for sideling the fear of eliminating the competition was that deals as such have been usual as Yahoo had completely outsourced its search to Google before 2004 until it came up with its own algorithm; the development of which has been very recent.
There was plenty of word slinging done at each other as Drummond voiced his thoughts stating that such a deal is not indicative of eliminating Yahoo from competition and Google plans to compete Yahoo in the countless other areas. Microsoft’s reaction was taken up by Callahan to be damaging to Yahoo; as everything they had proposed was more in favor at weakening Yahoo rather making it a competitive element in the Websphere. Doesn’t this seem very much Microsoftish? We have seen Microsoft’s hunger for dominating everything there is to bee dominated; the best example of which has been the desktop OS arena; where the field has been left in a position where future development of Internet as a platform has been snail paced.
And we can very well guess what would have been the response of Microsoft’s Brad Smith. He argued that such a deal would pave way at the creation of single entity that would be control 90% of the ad market. Also to side with Brad Smith was Mathew Crowley, who looks out marketing for AT&T’s yellow pages; stating that the deal would set a stage for higher ad rates.
Each one of the concerned parties had varying point of views when it came to questioning them; Brad Smith opened too much and spilt out saying that in talks between Microsoft and Jerry Yang; Yang had suggested that such a deal with Google would sideline Microsoft creating a single unit of Yahoo and Google. This could be true somehow; as Yang has been pretty vocal against Microsoft and the billionaire investor Carl Icahn. But this was immediately declined by Callahan who was also present in the meetings claiming that he recalled no such statement from Jerry Yang in any of the meetings held. Plus Yahoo had also declined Microsoft and Icahn’s offer at the remaking of the Yahoo Board including the ouster of Jerry.
However what’s surprising here is that Microsoft considers Google/Yahoo partnership to be a blow at competition but a deal between Yahoo/Microsoft would prove healthier, as both of them had second and third positions and a merger between the two would help create competition.
From what it appears the Senate by no means is interested at halting the Google/Yahoo deal but it might do enough to influence what the public perception is, thus hitting in at the response of regulatory authorities. The mere reason was, to let the three put forward their concerns about the latest development in this regard.
There was no such thing as a result to all this and we here think that all this is set to become a vital part of our daily Web-News. It’s quite surprising though, how things have been shaping up; there have bankers who were blamed for killing the Microsoft, Yahoo deal, Yahoo firing cannons and turning down the proposal and then Icahn who has been topsy turvy about how Yahoo has to go on, though he has quite favored the deal with Google but he holds grudges against its present board, specially Jerry Yang. Sounds moree like a curry than professional going about what they are best at and all this saga might just end up unexpectedly; where? Let’s leave it for time to tell.