While Yahoo formulates a defense against Microsoft's hostile $44.6 billion bid, Google is showing much love and support to Yahoo -- a company it generally regards as a competitor. Google's turnabout suggests the seriousness of the threat Microsoft poses, and may give the lie to Google's claims that a Microsoft-Yahoo combination would be anticompetitive.
Google CEO Eric Schmidt has reportedly been on the horn with Yahoo CEO Jerry Yang, trying to iron out some sort of deal under which Yahoo will outsource its search business to Google.
In the meantime, Google's chief legal officer David Drummond is blogging about the threat a merged Microsoft-Yahoo would pose to life, liberty and the pursuit of happiness.
"There are lots of levels of irony here," says Joseph Turow, a professor at the Annenberg School for Communication at University of Pennsylvania.
Google's interest is hardly altruistic -- it's more likely a form of retaliation against Microsoft for raising objections to its acquisition of DoubleClick.
The bickering between Microsoft and Google has gotten ugly, culminating with Drummond's characterization of Microsoft's business practices as "inappropriate and illegal." (And if you're keeping count, Drummond used the word "openness" three times in his blog post, while Microsoft used the word once in its response.)
"The key thing to look at in antitrust matters is to see who is complaining," says Stan Leibowitz, an economics professor at the University of Texas at Dallas. "If consumers are complaining, there's a good chance [that the deal] will reduce competition. And if the so-called competitors are complaining, chances are good that [the deal] will increase competition. The fact that Google's against [Microsoft,] and it's the market leader, it would indicate, almost by its action, that the market's going to be more competitive."
Assuming the transaction increases competition in the marketplace, the chances that regulators will interfere with the deal are slim. Still, Liebowitz doesn't rule out a good fight from European regulators.
"The European regulators don't like Microsoft very much," says Liebowitz. "It's hard for regulators to stop a merger, but I suspect they'll give it a serious go over there."
