Google fired back on Sunday at Microsoft's bid to acquire Yahoo, accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.
David Drummond, a Google chief legal officer, said in a blog post
that the combination of Microsoft and Yahoo could undermine competition on the Web and called on policy makers to challenge the combination.
"This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation," Drummond said.
Drummond also argued that Microsoft's power stems from decades- old monopolies in Windows -- the software operating system used to control most personal computers -- and Internet Explorer, which is the dominant browser consumers used to view the Web.
Microsoft's proposed merger with Yahoo would combine the No. 1 and No. 2 suppliers of Web-based e-mail, instant messaging and portals, which act as starting points for hundreds of millions of users seeking information on the Web.
"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and Web-based services?" Drummond said in Google's blog.
Microsoft responded to Google's arguments by saying that a merger with Yahoo would create a "compelling number two competitor for Internet search and online advertising" to market leader Google.
"The alternative scenarios only lead to less competition on the Internet," Microsoft General Counsel Brad Smith said in a statement
Microsoft also said that Google has amassed about 75 percent of paid search revenues worldwide, adding that Microsoft and Yahoo! on the other hand have roughly 30 percent combined in the U.S. and approximately 10 percent combined in Europe.
"Microsoft is committed to openness, innovation, and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo! will advance these goals,"Microsoft added.
U.S. and European antitrust regulators aren't likely to prevent Microsoft from buying Yahoo, according to analysts. The main reason is the fact that Google is already dominating in Adv business, after he acquisition of DoubleClick.
Yahoo to Consider a Google Alliance?
At the same time, Reuters reported on Sunday that
Yahoo would consider a business alliance with Google as one way to rebuff a $44.6 billion takeover proposal by Microsoft, citing a source familiar with Yahoo's strategy.
"Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid," that source said. "At $31 a share, Yahoo believes the bid undervalues the company," two sources said.
Officially, Yahoo claims that absolutely no decisions have been made until now.
The Wall Street Journal reported on its Web site on Sunday that Google's chief executive Eric Schmidt called Yahoo's chief executive Jerry Yang to offer his company's help in any effort to thwart Microsoft's bid.