Google opposes Microsoft takeover of Yahoo!

Google has said it finds Microsoft's $44.6bn 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".

Brad Smith, Microsoft's general counsel, said that the combination of the two companies would create more competition.

The takeover, if it goes through, would establish a "compelling number two competitor for internet search and online advertising", he said, insisting that "Microsoft is committed to openness, innovation, and the protection of privacy of on the internet".

But that view is not held by the top executives at Google. "Microsoft's hostile bid for Yahoo raises troubling questions," said David Drummond, Google's senior vice president for corporate development and chief legal officer.

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.

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.
 
The news comes are Google revealed less than stunning results for the previous year. It has seen its shareprice fall over 18% in the last year.