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Reaction to Microsoft offer


Google Says Microsoft's Bid for Yahoo Is `Troubling'

By Ari Levy and Dina Bass

Feb. 3 (Bloomberg) -- Google Inc., owner of the world's most used Internet search engine, said the proposed takeover of rival Yahoo! Inc. by Microsoft Corp. ``raises troubling questions'' for Web users.

Microsoft, the world's largest software maker, made a $44.6 billion unsolicited bid for Yahoo Feb. 1, moving to combine the second- and third-biggest Web search providers. The companies have some of the most popular e-mail and instant messaging programs and both sell graphical, or display, ads over the Web.

Buying Yahoo, also the owner of the most visited group of Web sites in the U.S., would help Microsoft quadruple sales from online advertising. Today, Google questioned whether the deal would let Microsoft ``attempt to exert the same sort of inappropriate and illegal influence over the Internet'' that it did with personal computers.

``This is about more than simply a financial transaction, one company taking over another,'' Mountain View, California- based Google said in a blog posting on the Web. ``It's about preserving the underlying principles of the Internet: openness and innovation.''

Yahoo, based in Sunnyvale, California, surged $9.20, or 48 percent, to $28.38 on Feb. 1 in Nasdaq Stock Market trading, the biggest advance in over a decade. Microsoft fell $2.15, or 6.6 percent, to $30.45. Google lost $48.40, or 8.6 percent, to $515.90.

Yahoo's Options

The offer from Microsoft is one of many options Yahoo is evaluating to boost the value of its stock, Chief Executive Officer Jerry Yang and Chairman Roy Bostock said in a Feb. 1 e- mail to employees obtained by Bloomberg News. The board will respond after completing ``a careful review of all of our strategic alternatives,'' according to the message.

Microsoft General Counsel Brad Smith countered Google's claims in a statement, saying the transaction would help improve ``openness, innovation, and the protection of privacy on the Internet.''

The U.S. Justice Department is ``interested'' in reviewing the antitrust implications of the deal, agency spokeswoman Gina Talamona said last week. Neelie Kroes, commissioner of competition for the European Commission, said her agency also would scrutinize a Microsoft-Yahoo deal.

In 2001, a U.S. appellate court found Redmond, Washington- based Microsoft illegally defended its Windows monopoly by forcing Internet service providers to feature Microsoft's Internet Explorer browser. The court also found the company put restrictions on personal computer makers to bar them from changing the way Windows looked when users turned on machines.

Previous Investigations

A settlement with the U.S. Justice Department forced Microsoft to allow computer makers to highlight rival software on Windows without fear of retaliation.

In 2004, European regulators ordered Microsoft to license information to rivals and sell a version of Windows without a built-in video and audio player. Under the decision, Microsoft also had to pay a record 497 million euro ($735.7 million) fine. The European Commission last month opened two new antitrust probes into Microsoft's behavior.

Google has its own regulatory issues. Microsoft objected last year to Google's $3.1 billion offer for display ad provider DoubleClick Inc., saying it would give Google too much control in the online ad market. The deal is under review by European regulators.



Google aggodalma a Yahoo vs. Microsoft házasságáról

Google Works to Torpedo Microsoft Bid for Yahoo


Standing between a marriage of Microsoft and Yahoo may be the technology behemoth that has continually outsmarted them: Google.

In an unusually aggressive effort to prevent Microsoft from moving forward with its $44.6 billion hostile bid for Yahoo, Google emerged over the weekend with plans to play the role of spoiler.

Publicly, Google came out against the deal, contending in a statement that the pairing, proposed by Microsoft on Friday in the form of a hostile offer, would pose threats to competition that need to be examined by policy makers around the world.

Privately, Google, seeing the potential deal as a direct attack, went much further. Its chief executive, Eric E. Schmidt, placed a call to Yahoo’s chief, Jerry Yang, offering the company’s help in fending off Microsoft, possibly in the form of a partnership between the companies, people briefed on the call said.

Google’s lobbyists in Washington have also begun plotting how it might present a case against the transaction to lawmakers, people briefed on the company’s plans said. Google could benefit by simply prolonging a regulatory review until after the next president takes office.

In addition, several Google executives made “back-channel” calls over the weekend to allies at companies like Time Warner, which owns AOL, to inquire whether they planned to pursue a rival offer and how they could assist, these people said. Google owns 5 percent of AOL.

Despite Google’s efforts and the work of Yahoo’s own bankers over the weekend to garner interest in a bid to rival Microsoft’s, one did not seem likely, at least at this early stage.

For example, a spokesman for the News Corporation said Sunday night that it was not preparing a bid, and other frequently named prospective suitors like Time Warner, AT&T and Comcast have not begun work on offers, people close to them said. They suggested that they did not want to enter a bidding war with Microsoft, which could easily top their offers.

A spokesman for Time Warner declined to comment, as did a spokesman for Comcast. A representative for AT&T could not be reached.

In the meantime, people close to Yahoo said that the company received a flurry of inquires over the weekend from potential suitors. Some people inside Yahoo have even speculated about the prospect of breaking up the company. That could mean selling or outsourcing its search-related business to Google and spinning off or selling its operations that produce original content, these people said.

“Everyone is considering all kinds of options and a deal on search is one of them,” a person familiar with the situation said.

One person involved in Yahoo’s deliberations suggested that “the sum of the parts are worth more than the whole,” arguing that its various pieces like Yahoo Finance, for example, could be sold to a company like the News Corporation for a huge premium while Yahoo Sports could be sold to a company like ESPN, a unit of the Walt Disney Company.

Executives at rival companies were less optimistic about such a breakup strategy. “No one can get to a $44 billion price,” one executive at a major media company said, “even if you split it into a dozen pieces.”

In making its bid for Yahoo, Microsoft is betting that past antitrust rulings against it for abusing its monopoly power in personal computer software will not restrain its hand in an Internet deal.

In the United States, a federal district court in Washington ruled in 2001 that Microsoft had repeatedly violated the law by stifling the threat to its monopoly position posed by Netscape, which popularized the Web browser. The suit, brought during the Clinton administration, was settled by the Bush administration. But as a result of a consent decree extending through 2009, a federal court and a three-member team of technical experts monitors Microsoft’s behavior.

In 2006, for example, after Google complained to the Justice Department and the European Commission that Microsoft was making its MSN search engine the default in the most recent version of its Web browser, Microsoft modified the software so that consumers could easily change to Google or Yahoo.

In Google’s statement on Sunday, it said that the potential purchase of Yahoo by Microsoft could pose threats to competition that needed to be examined by policy makers.

Google’s broadly worded concerns lacked detailed claims about any anticompetitive effects of the deal, and the company did not publicly ask regulators to take specific actions at this time.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” asked David Drummond, Google’s senior vice president and chief legal officer, writing on the company’s blog.

Yahoo and Microsoft declined to comment Sunday on Google’s actions. Earlier on Sunday, Microsoft’s general counsel, Bradford L. Smith, said in a statement: “The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising.”

Google’s effort to derail or delay the deal on antitrust grounds mirrors Microsoft’s own actions with respect to Google’s bid for the online advertising specialist DoubleClick for $3.1 billion, announced in April.

The strategy is not surprising, considering that any delays would work to Google’s benefit. “Google can tap into all of the ill will that Microsoft has created in the last couple of decades on the antitrust front,” said Eric Goldman, director the High-Tech Law Institute at the Santa Clara University School of Law.

The outcome of any antitrust inquiry will hinge, in part, on how regulators define various markets. Microsoft-Yahoo, for instance, would have a large share of the Web-based e-mail market, but a smaller share of the overall e-mail market.

“The potential concern would be that Microsoft, if it acquires Yahoo, could do on the Internet what it did in the personal computer world — make technical standards more Microsoft-centric and steer consumers to its products,” said Stephen D. Houck, a lawyer representing the states involved in the consent decree against Microsoft.

Yahoo has not made a public statement about the proposed deal since Friday, when it said it was weighing Microsoft’s offer as well as alternatives and would “pursue the best course of action to maximize long-term value for shareholders



Google vs Microsoft Yahoo


News Corp.: No Interest in Yahoo!

Rupert Murdoch may have shaken up "old media" with his blockbuster acquisition of The Wall Street Journal last year, but don't expect him to get into new media's latest kerfuffle over Microsoft's (MSFT - Cramer's Take - Stockpickr) $44 billion bid for Yahoo! (YHOO - Cramer's Take - Stockpickr).

"We are definitely not going to make a bid on Yahoo," said Murdoch on a conference call with analysts following his media empire's second-quarter earnings report to Wall Street. When asked if he would have any interest in Time Warner's (TWX - Cramer's Take - Stockpickr) AOL unit, he said "That's an even easier question -- no."

Murdoch said News Corp. has no acquisition targets in its sights at the moment.

"Historically, we've done better with start-ups than with purchases," he said.

As for News Corp.'s (NWS - Cramer's Take - Stockpickr) $5.6 billion bid for Dow Jones, The Journal's publisher, Murdoch said he views it largely as a new media venture. While he plans to keep the subscription model at the newspaper's Web site alive, he said the company is focused on rolling out new online content that will be free and attractive to a broader, global audience.

"The niche financial information is tremendously valuable to people, and we think we've got to charge for it just like everyone else," said Murdoch.

The company logged net income of $832 million, or 27 cents a share, for the quarter. The results, in line with estimates on Wall Street, marked an increase from the $822 million, or 26 cents a share, it recorded for the same period last year.

On its top line, News Corp. reported revenue for the quarter of $8.6 billion, up 9.5% from last year.

"Domestically, the strength of our broadcast network and cable assets has enabled us to capitalize on the current advertising market, while at the same time we continue to ramp up affiliate revenues across our cable channels," said Murdoch. "And our internet platform is now delivering real profits from locked in search revenues as well as from advertising revenue growth as a result of our hyper-targeting initiatives. We are also generating increased profits internationally."

News Corp. has an advertising partnership with Web search giant, Google (GOOG - Cramer's Take - Stockpickr), for its popular social networking site, MySpace. That remains a focus on Wall Street, where analysts are trying to gauge the long-term prospects of the online advertising market.

News Corp.'s operating income jumped 23% to $1.4 billion for the quarter, boosted by double-digit gains in almost all of its operating businesses. Strong results at its TV properties -- the Fox Network and The Fox News Channel -- offset slower growth in its volatile film business.

Looking ahead, News Corp. CFO Dave Devoe said the company expects 2008 operating income growth "in the mid-teens." Previously the company was forecasting operating income growth for the year in the low teens.

"I'm more bullish than ever," said Murdoch about News Corp.'s prospects.

The company had rights on Sunday's record-breaking Super Bowl broadcast with a total of 97.5 million viewers. The show's audience was second only to the "M-A-S-H" finale audience, Nielsen Media Research said Monday.

Murdoch said News Corp. brought in $250 million in gross revenue on Super Bowl Sunday, marking the biggest day in the company's history.

Meanwhile, News Corp. and its media counterparts remain locked in a faceoff with the industry's writers, who have been on strike since November over compensation for digital content. Recent media reports indicate that the work stoppage may soon be over, but News Corp. president Peter Chernin declined to speculate on that.

"The writer's strike had no material impact on the quarter's results," said Devoe.



News Corp.ot nem érdekli a Yahoo.



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