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

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.”

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.

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.


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