It might harm Google
The US Justice Department is apparently all in a tizz about the
Microsoft Yahoo deal. While it is not actually a buy-out it does have
some pretty strong components which normally
would cause an anti-trust watchdog cause for concern.
Microsoft and Yahoo confirmed Friday that the Justice Department has asked the two companies
for more information about their deal, which is a step beyond taking a mere
interest in the proceedings. However the DoJ interest is strange given that it is an alliance of two lesser companies, at
least in the search market, to take on the biggest, According to CNET the
Justice Department is likely looking at two different aspects of the deal. On
one hand, regulators are expected to probe whether advertisers will be harmed
by the loss of an outlet for their ad dollars, as well as whether Google has
less incentive to compete for searchers.
The deal is going to eliminate a competitor in search in a market that has high barriers
to entry and only has three players. Analysts believe that the Justice Department will force Microsoft and Yahoo to put Yahoo's
search technology assets up for auction to let the deal go
through. This will allow a third major player to enter the business.
Of course this is largely pointless. It is a doodle to create a search
engine, it is harder to
get people to use it. Microsoft has spent a fortune on development and
launch of Bing and it will want Yahoo's
search technology, not to mention some of its engineers. However what
is more likely is that Google has been playing its cards in Washington
much
better than Microsoft. Google backed
Obama to win and it is likely that it is calling on a few favours.
It will be interesting to see to what extent that will be.
However of the DoJ kills the deal it will be a little unfair. Google
is far too powerful and two small competitors are not enough to
balance it.