Yahoo v/s Microsoft- a follow up by Navtej kohli

The most talked about controversy on which the future of IT is hinged
on got horrendous when Yahoo announced to use Google Ads
as defense against Microsoft. As Microsoft is tightening its grip over
yahoo, by strictly fixing a three week time limit, sources disclosed
that yahoo is still in talks with Time Warner's AOL about a potential
tie-up. Eager for a higher offer, yahoo said it would test using Web
search advertising from Google in a move that pressures Microsoft to
raise its bid for the company.


According to a news report, the two-week test with Web search leader
Google would involve Yahoo targeting Google Web search advertisements
at 3 percent of the users of Yahoo's own search services. Brokerage
Sanford C. Bernstein has estimated that by turning over all search ads
to Google, Yahoo could boost revenue by 10 percent.


Microsoft fired back saying that a deal between Yahoo and Google would
make the market for Web search less competitive -- turning the tables
on Google, which has charged Microsoft with anti-competitive practices
in the past. Microsoft itself would face tough regulatory scrutiny if
it buys Yahoo.


Microsoft General Counsel Brad Smith said “Yahoo and Google would
consolidate more than 90 percent of the search ad market in Google's
hands”. Herb Kohl, the Democratic head of the U.S. Senate antitrust
subcommittee, chimed in to say he was watching Yahoo's deal closely to
"ensure it does not harm competition."


Investors barely reacted to what was seen as Yahoo's latest effort to
force Microsoft to raise its cash-and-stock bid, now valued at US$42
billion. Yahoo shares rose 7 cents to US$27.77, Microsoft added 14
cents to US$28.89, and Google fell 0.8 percent to US$464.19.


"This doesn't put an end to the negotiations, but it perhaps balances
things out," Cowen and Co analyst Jim Friedland said. "It looked like
Microsoft had all the cards. Yahoo is at least now able to use this for
leverage to get Microsoft to pay more."