Microsoft LOOKS to BUY Yahoo

04 February 2008, 7:59am

Microsoft last Friday, has launched an offer to acquire MSN-rival Yahoo in a cash and share bid of $44.6bn (£22.4bn). This follows in the wake of struggling performance from Yahoo in recent weeks.

Dr. Hans Friederiszick, Managing Director of ESMT Competition Analysis, the Competition arm of the Berlin-based international business school, reviews the merger. Competition Analysis has recently provided external third party consultation in the ongoing assessment of the Google/DoubleClick merger. Hans Friederiszick, comments:

“This is a two-pronged issue of competition and privacy and will be treated as such by the competition and regulatory authorities both in Europe and the US. Competition issues will focus on the question of whether this will encourage unilateral price increases for internet advertising via search engines given the already high level of concentration in this market. This merger will reduce the number of search engine providers with significant global reach from three to two, paving the way for a tight duopoly in these markets. As such, the EC competition authority is right to carefully scrutinise ongoing mergers in this industry.

“This merger is anything but clear cut. Whilst the search-engine marketplace is highly concentrated, the authorities could take the view that the proposed merger would in fact be pro-competitive by creating an organisation with the strength and clout to vie more effectively with Google for market space. In turn, Google may welcome this move as it allows Google to argue that its likely dominant position is contested by an equally strong player. Whether the merged entity will have this potential remains to be seen. In any case, one barrier for the proposed merger to get approved may be the relationship between the Commission and Microsoft, following its strategic use and abuse of interoperability. If Microsoft were to bundle search and advertisement facilities into the Windows operating system, this would certainly be a cause for concern.”

Hans Friederiszick concludes:

“It would be desirable to see the US and European authorities act with some concord on today’s proposal, although this is incredibly challenging. Today’s proposal is a perfect illustration of the challenge of globalisation to competition authorities. These are two international businesses where the competition issues plainly need to be addressed across different jurisdictions, yet the market outcomes and impact in those jurisdictions are very different. Even so, there have been great strides in reaching such a dialogue in recent years. But whether Europe will agree on the threat to consumer privacy, given the more interventionist attitude on this side of the Atlantic, remains to be seen.”

Contact

UK media, Marketforce Communications on behalf of ESMT

Milly Saunders, Tel.: +44 20 7608 3222, Mob. +44 7904 653 143, msaunders@marketforce.eu.com, Marketforce Communications, 5 Sycamore Street, London, EC1Y 0SG.

Christiane Hach, ESMT

Tel.: +49 (0)30 21 231-1042, Fax: +49 (0)30 21 231-1069, hach@esmt.org, ESMT European School of Management and Technology, Schlossplatz 1, 10178 Berlin, Germany

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