Challenging Google

What happened
Google on Sunday offered to help Yahoo! fend off a hostile, $44.6 billion takeover bid from Microsoft, and said the deal would raise "troubling" antitrust questions because it could make Microsoft too powerful. Microsoft lawyers dismissed the concerns, saying that joining together Microsoft and Yahoo! would make the marketplace more competitive by creating a "more compelling No. 2 competitor for Internet search and online advertising," which Google dominates. (The Wall Street Journal)

What the commentators said
“The Yahoo! merger is classic Microsoft,” said Farhad Manjoo in Salon, in that it is “a brilliant stock move” rather than a technical innovation of any sort. But that’s the problem with it: Yahoo! and Microsoft both lack Google’s “relentless culture of creation.” Google is “eating everyone’s lunch simply because it makes things faster, better, and more useful than anyone else—and Microhoo will have no better way than Yahoo! and Microsoft did to replicate that engineering feat.”

That’s true right now, said Chris Wilson in Slate. But a combined Microsoft-Yahoo! “would be in great position to head Google off at the pass” for the Web’s next big thing. Google owns the search market, but the three companies have been racing to capture the market on “the rest of the Web experience”—photos, music, and office productivity applications. Mix Yahoo!’s strength as the No. 1 Web portal with Microsoft’s dominant position in “offline software,” and you have “the ingredients for a powerful Google alternative.”

That looks good on paper, said Paul Maidment and Dan Bigman in Forbes.com. But the merger faces two serious threats: “Microsoft and Yahoo!” The marriage of “these two legendary bureaucracies” will be a “nightmare.” Plus, Yahoo! is a directionless mess while Microsoft has one speed: slow. But good idea or not, “this deal will close.” Sure, there will be perfunctory antitrust “teeth-gnashing, especially in Europe,” but Microsoft set too high a bid for anyone else to counter—except maybe Google, and that seems “unlikely.”

Don’t discount the antitrust concerns, said John Dvorak in MarketWatch. The EU will never go for it, nor should they, and “I will personally be stunned if this deal, in the end, passes muster and is actually consummated.” Microsoft and Yahoo! are dominant Web portals and top players in free email, groups, and content delivery. “How is this NOT an anti-trust violation”?