Microsoft, a veteran defendant of epic antitrust battles in the United States and Europe, is urging regulators to consider scuttling Google’s plan to buy DoubleClick, an online advertising company. Microsoft contends that the $3.1 billion deal, announced on Friday, would hurt competition in the fast-growing market for advertising on the Web and raises questions about how much personal information would be collected by Google, already a dominant player in online advertising. Bradford L. Smith, Microsoft’s general counsel, said in an interview yesterday that Google’s purchase of DoubleClick would combine the two largest online advertising distributors and thus “substantially reduce competition in the advertising market on the Web.” Google dismissed Microsoft’s assertions. “We’ve studied this closely, and their claims, as stated, are not true,” Eric E. Schmidt, the chief executive of Google, said in an interview last night.
Some of you might scoff at the notion that Microsoft wants competitive markets. So what’s up with the proposed Microsoft acquisition of Yahoo?
Microsoft Corp.’s proposed $42 billion purchase of Yahoo Inc. would establish the world’s largest software maker as a “strong No. 2 competitor” against online search leader Google Inc., Microsoft CEO Steve Ballmer said Monday. Speaking to a group of analysts in New York, Ballmer said the acquisition of Yahoo would raise competition, rather than eliminate it, in the Web search and advertising market. “Google’s clearly got a dominant position. They’ve got about 75 percent of paid search worldwide,” Ballmer said. “We think this enhances competition. Anything else would be less good from that perspective.” On Sunday, a Google executive said Microsoft could use the acquisition to gain too much control over the Internet, underscoring the online search leader’s queasiness about its two biggest rivals teaming up. Google’s opposition isn’t a surprise, given that Microsoft views Yahoo as a crucial weapon in its battle to gain ground on Google. “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,” Google chief legal officer Michael Drummond wrote in the company’s blog ... Since announcing its unsolicited bid early Friday, Redmond, Wash.-based Microsoft has been trying to depict a Yahoo takeover as a boon for both advertisers and consumers because the two companies together would be able to compete against Google more effectively. But Google is painting a starkly different picture, asserting that Microsoft will be able to stifle innovation and leverage its dominating Windows operating system to set up personal computers so consumers are automatically steered to online services, such as e-mail and instant messaging, controlled by the world’s largest software maker. In a move that illustrates just how badly Google wants to torpedo the deal, Google Chief Executive Officer Eric Schmidt called Yahoo CEO Jerry Yang Friday to offer his help in repelling Microsoft, according to a report Sunday on The Wall Street Journal’s Web site, which cited anonymous people familiar with the matter.
This spat between Google and Microsoft over who is more concerned about preserving competition strikes me as a big disingenuous on both of their parts. As the Internet moves closer to a duopoly market, shouldn’t our government being taking a much closer look at the economics as to whether these acquisitions should be allowed or not?
Update: Alex Tabarrok argues that Google’s complaint is an example of antitrust protectionism.