Google and Microsoft Take Up Battle Stations Februarie 5, 2008Posted by MoshutZu in IT si Comunicatii, Stiri.
WASHINGTON — It could be payback time.
An expensive legal and political campaign last year by Microsoft helped delay completion of Google’s $3.1 billion bid for the online advertising company DoubleClick. Microsoft filed briefs against the deal in the United States and abroad, testified against it in Congress, and worked with a public relations firm to generate opposition.
Now Google is preparing to strike back.
With Microsoft bidding nearly $45 billion to buy Yahoo, Google has begun to lay the groundwork to try to delay, and possibly derail, any deal. Google executives have asked company lobbyists to develop a political strategy to challenge the acquisition, which could threaten Google’s dominance of Internet advertising. Google’s top legal officer posted a statement Sunday that criticized the proposed deal.
Spokesmen for the two companies in Washington declined to comment Monday about a looming legal and political battle, which has yet to fully emerge and is likely to stay below the radar at least until the control of Yahoo seems clear.
Moreover, some antitrust specialists and government officials said Google might tread carefully in opposing any deal since it could backfire.
Google dominates the market for Internet advertising, and to the extent it portrays the deal as encroaching on that dominance, it could help make Microsoft’s case that its acquisition of Yahoo would create a more competitive marketplace.
Lawmakers are responding to the takeover attempt. Representative John Conyers, Democrat of Michigan and chairman of the House Judiciary Committee, said he would hold hearings to examine any proposed deal.
And Senator Herb Kohl, Democrat of Wisconsin, who leads an important antitrust subcommittee, said he was interested in the proposed acquisition. “Should Yahoo accept Microsoft’s offer,” he said, “the subcommittee expects to hold hearings to explore the competitive and privacy implications of the deal.”
Google and Microsoft have the ability to wage a major political fight, the kind appreciated in Washington for the money it generates in lobbyist fees and political donations for lawmakers. Both companies began their Washington operations as one-man bands but now have large presences.
Microsoft enlarged its Washington staff in the late 1990s after it came under antitrust assault in the Clinton administration. Its lobbying shop is considered among the most effective in the capital, and it has retained more than 20 law firms, lobbying companies and press relations operations for an array of political and regulatory issues.
Google’s Washington office is less than three years old and has been steadily growing. In fall 2006, it established a political action committee and has since used Democrats from the Podesta Group lobbyists, two former Republican senators — Connie Mack and Dan Coats at the law firm of King & Spalding, and the law firm of Brownstein Hyatt Farber Schreck.
Google recently moved to larger quarters, with 27,000 square feet of space including a game room, open work areas, free lunches and environmentally friendly features like recycled rainwater — a smaller version of its Silicon Valley headquarters.
While Microsoft and Google have been occasional allies in Washington — they have worked together on intellectual property legislation and issues of open access — they clashed last year on legal and regulatory fronts.
In addition to the fight over DoubleClick, Google lodged a complaint in antitrust proceedings against plans for Vista, Microsoft’s new operating system. Google said these were anticompetitive because they unfairly discouraged the use of Google’s desktop search program. By lobbying in state capitals, Google persuaded prosecutors to intervene on its behalf. Ultimately, Microsoft agreed to modify the operating system to make it easier for users to decide which search application they wanted.
As they are gearing up now, a legal fight, if at all, is months away. Federal regulators will not begin to consider any deal until it is completed and formally presented. It is not certain whether the deal would be considered by the Justice Department, which has overseen previous antitrust proceedings against Microsoft, or the Federal Trade Commission, which reviewed and approved Google’s purchase of DoubleClick. (That transaction has not closed as European regulators continue to review it.)
Moreover, the size and complexity of a Microsoft-Yahoo deal is such that a government review is unlikely to be completed quickly, particularly in an election year, and may not be final before a new administration takes office in 2009.
Should Yahoo finally agree to be acquired by Microsoft, a focus of the political and legal debate will be the products and markets that could be affected. Microsoft has said the acquisition would increase competition in two related and large markets: Internet search and online advertising. Many ad industry executives, who have watched Google’s rise with some trepidation, agree.
But Google wants the focus of any antitrust debate to shift to issues other than search and advertising. In a statement posted on his company’s blog Sunday, David Drummond, Google’s general counsel, noted that a combined Microsoft and Yahoo would have an “overwhelming share” of the instant messaging and Web e-mail markets, and that the two companies run some of the most trafficked portals on the Web.
“Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ e-mail, I.M., and Web-based services?” Mr. Drummond asked.
It is not hard to see why Google wants to shift the focus. In the search market, a combined Microsoft-Yahoo would have about 33 percent of the market, still trailing Google’s 58 percent, according to comScore.
But in Web-based e-mail, comScore ranks Yahoo, with 256 million visitors worldwide in December, and Microsoft, with 255 million, as the top two providers. While there is bound to be overlap among users of the companies’ e-mail services, a combined Microsoft-Yahoo would command a much larger share than Google, which comScore ranks in third place with 90 million visitors in December.
Yahoo and Microsoft also rank No. 1 and 2 in financial news, and No. 2 and No. 1 in instant messaging, according to comScore.
Stephen Labaton reported from Washington and Miguel Helft from San Francisco.