Microsoft Concerned About Google-Yahoo

Redmond (WA) - Microsoft today added another episode to the Yahoo-Google-Microsoft-Icahn soap opera. Microsoft’s general counsel Brad Smith today told Congress members today that the a combination of Google and Yahoo will create less choice, less innovation and higher prices for online advertisers, content creators and consumers.

In a testimony before the Senate Judiciary Committee Subcommittee on Antitrust and the House Judiciary Committee Antitrust Task Force, Smith was seen today in an unusual position for Microsoft - as the underdog and someone who is concerned of the market commanding position of another company. In his testimony before both committees, Smith questioned the legality of the deal, outlining the damage it could do to competition in online advertising and innovation on the Internet.

"If search is the gateway to the Internet, and most believe that it is, this deal will put Google in a position to own that gateway and the information that flows through it," Smith said. "Never before in the history of advertising has one company been in the position to control prices on up to 90% of advertising in a single medium. Not in television, not in radio, not in publishing. It should not happen on the Internet."

"When Yahoo ! talks about this deal generating up to $800 million in additional revenue, that’s money out of the pockets of American businesses, big and small, who will pay higher prices for the very same ads they buy from Yahoo ! today," Smith continued.

The executive was especially concerned that this deal could put "Google in control of the gateway to the Internet : searches, raising significant privacy implications."

Microsoft also notes that Google currently accounts for 70-75% of search advertising revenue on the Internet and the company’s market capitalization is as large as Coca-Cola and Boeing combined, hinting that legislators should be thinking about putting some limitations on what Google can do and what not.

Earlier this year, Google said that it would be concerned about a combined Microsoft/Yahoo. In a blog post, the company’s chief legal officer said that "Microsoft’s hostile bid for Yahoo raises troubling questions" and claimed that Microsoft could "now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC".