Google Bids to Thwart Microsoft-Yahoo Deal

Google and Yahoo were expected to continue unofficial contacts Monday after Microsoft's bid for Yahoo sparked a furious round of jockeying among the biggest players on the internet.

Microsoft tabled an unsolicited $44.6 billion bid for Yahoo on Friday, in what could be the largest-ever technology takeover. The offer of 31 dollars per share for Yahoo represented a 62 percent premium on Yahoo's Thursday closing price.

Yahoo acknowledged receiving the unsolicited bid but CEO Jerry Yang said that the company was still exploring other options and that no decisions had been made, according to the San Jose Mercury News.

Over the weekend Google CEO Eric Schmidt called Yang to offer Google's help in thwarting the Microsoft bid. Though antitrust regulations mean that internet search leader Google is unlikely to take over its top rival, Google could help in other ways.

For instance, it could strike a multi-billion dollar deal to sell advertising on Yahoo's search pages, or it could come in as a supporting partner in another buyout deal for the company.

Signaling its resolve to scupper a merger between its two biggest rivals, Google also issued a statement arguing that a combination of the two companies would be bad for net users.

Noting that Yahoo and Microsoft together provided instant messaging and email services to more than half of all Internet users in the US, Google accused Microsoft of seeking to extend its computer software monopoly deeper into the internet realm and undermine competition on the web.

"Microsoft's hostile bid for Yahoo raises troubling questions," said David Drummond, Google's chief legal officer. "Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? Could the acquisition of Yahoo allow Microsoft... to extend unfair practices from browsers and operating systems to the internet?"

Microsoft responded to Google's arguments by saying that a merger with Yahoo was necessary to counter Google's dominance on the internet.

"The alternative scenarios only lead to less competition on the internet," Microsoft General Counsel Brad Smith said in a statement.

Microsoft executives cited industry data showing Google has a 75 percent share of worldwide web search revenue. Collectively, Yahoo and Microsoft attract around 20 percent of Web searches, internet measurement firms show.

"Today, Google is the dominant search engine and advertising company on the Web," Smith said. "Google has amassed about 75 percent of paid search revenues worldwide and its share continues to grow."

"Microsoft is committed to openness, innovation and the protection of privacy on the internet," Smith said. "We believe that the combination of Microsoft and Yahoo will advance these goals."