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Google Not Happy to Take a Hit

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LOS ANGELES Google executives and investors are none too happy about Microsoft's $44.6 billion bid for Yahoo! -- which presumably would create a more formidable competitor in Internet search and advertising -- and the war of words between the tech giants has intensified.

Shares of Google have dropped $68.87, or 12 percent, in the two trading days since Microsoft announced its intent to buy Yahoo! for $31 a share.

Google is fighting back on two fronts: It is attacking the proposed acquisition on antitrust concerns -- always a popular way to assail Microsoft -- and, according to published reports, it is offering to strengthen Yahoo! by partnering with it.

The Wall Street Journal reported Monday that Google CEO Eric Schmidt has called Yahoo! CEO Jerry Yang to offer his help, putting Yahoo in the unenviable position of having to embrace the help of one contentious rival in order to fend off the advances of another.
 
"Could the acquisition of Yahoo allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet?" asked Google chief legal officer David Drummond in a blog post Sunday.

Such concerns, though, probably fall flat coming from Google, which is so dominant in Internet search that it would still be No. 1 even if Yahoo! were to combine with Microsoft's MSN.

In December, according to Nielsen/NetRatings, Google had 56 percent of the market in the U.S., while MSN and Yahoo! combined for a 32 percent market share.

Google's objections were easily predicted, not only because a Microsoft-Yahoo! combination makes for stronger competition but also because Microsoft has been lobbying against Google's acquisition of DoubleClick, already approved in the U.S. but not yet in Europe.

Meanwhile, analysts were wondering whether Microsoft's interest in Yahoo would spur a bidding war, with Comcast and News Corp. cited as potential suitors.

News Corp. CEO Rupert Murdoch squelched such talk by telling analysts Monday that his company is "definitely not" going to make a bid for Yahoo.

Speaking to investors Monday in New York, Microsoft CEO Steve Ballmer said he expects Yahoo's board and shareholders to "join with us quickly in deciding to move down an integrated path."

Citing Google's clearly dominant position in Internet search, Ballmer said, "We think this enhances competition."