London Times has reported that Google Inc. executives met in an emergency meeting earlier this week to discuss what the revived discussions between Microsoft Corporation and Yahoo Inc. might mean for Google. Google is concerned about a deal that is likely being negotiated between Microsoft and Yahoo over the control of advertisements displayed next to Internet search results, as this market is currently dominated by Google.
A merger of Microsoft and Yahoo could upset that landscape. Online advertising is a huge source of revenue that is estimated to be currently worth almost $40 billion per year, and is predicted to grow to $80 billion by the year 2010.
Speaking at the Google Zeitgeist conference in Hertfordshire, England, hosted by the Google’s founders, Larry Page and Sergey Brin, Google’s Chief Executive, Eric Schmidt, said, “After this press conference the three of us will meet and decide what our response is.” Sergey Brin also announced at the conference that Google would give Jerry Yang, Yahoo’s Chief Executive, a place within Google if he were pushed out by Yahoo’s investors, and added that Google has not yet ruled out some sort of partnership with Yahoo.
Carl Icahn, a Yahoo investor, who is a well-known wild card in the mix of mergers, has threatened Yahoo with an ugly proxy fight and to replace the current Board of Directors of Yahoo with his own proposed slate of new Board members if Yahoo does not renew its discussions with Microsoft. Microsoft’s last offer to Yahoo of $48.5 billion was turned down by its investors as too low.
Google recently ran a limited technology trial on Yahoo!’s U.S. site. This was widely viewed as posturing by Yahoo, and as potentially offering Jerry Yang an escape hatch in the event of a Microsoft takeover.
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