Google: Microsoft-Yahoo merger will be bad for openness innovation

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Up until now, Google had not responded to the proposed Microsoft-Yahoo merger, but now the company has via a blog written by David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer.

Drummond said the openness of the Internet made Google, Yahoo and a host of other companies. Because of this openness, good ideas spread quickly through the web and user benefit from innovation created by competition.

Drummond wrote on his blog:

"Microsoft's hostile bid for Yahoo! raises troubling questions. 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."

Microsoft forced software on the customers in the PC market, and so it makes one wonder how could they behave differently with an Internet-based merger with Yahoo. Microsoft has already tried to establish proprietary monopolies and then use its power to grow in other areas according to Drummond.

Drummond said with this merger, Microsoft will extend its unfair practices from browsers and operating systems to the Internet. Microsoft controls a bulk of instant messaging tools and Web-based email accounts, and Microsoft and Yahoo combined would have the two most heavily trafficked portals on the Internet.

On the notion of creating a monopoly, Drummond wrote:

"Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers."

Drummond also talked about how Google is different from Microsoft:

"We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first -- and should come first -- as the merits of this proposed acquisition are examined and alternatives explored.

Microsoft responded to Google in its own way, but has not given clear answers. The company does say it favors openness, however its track record and history show the opposite.

Microsoft says the combination of Microsoft and Yahoo! will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising. The alternative scenarios only lead to less competition on the Internet.

Brad Smith, General Counsel of Microsoft responded with the following:

"Today, Google is the dominant search engine and advertising company on the Web. Google has amassed about 75 percent of paid search revenues worldwide and its share continues to grow. According to published reports, Google currently has more than 65 percent search query share in the U.S. and more than 85 percent in Europe. Microsoft and Yahoo! on the other hand have roughly 30 percent combined in the U.S. and approximately 10 percent combined in Europe. Microsoft is committed to openness, innovation, and the protection of privacy on the Internet. We believe that the combination of Microsoft and Yahoo! will advance these goals."

Meanwhile, another possible merger proposal is being proposed to Yahoo, according to Reuters. Reuters reports that Google and Yahoo may have some partnership being formed as a way to rebuff the $44.6 billion takeover proposal by Microsoft. The Wall Street Journal says Google CEO Eric Schmidt might have spoken with Yahoo CEO Jerry Yang and offered Google’s help to solve Yahoo’s problems.

This is the first time I have seen Google officially respond to their competitors, as most big companies talk about their own products and strategies, not competitors. But I think Google is right -- the merger may be good for Microsoft but definitely will not be good for users.

In my opinion, based on its track record, all Microsoft will do is try to make its Web traffic use or convert to other Microsoft products. Microsoft employed the same strategy when the company pushed Internet Explorer over Netscape. Microsoft said at that time it had a smaller share in the browser market.

No doubt, Google cannot buy Yahoo because of monopoly problems. But Google can assist Yahoo better than Microsoft, by partnering rather than swallowing the company completely.

Who do you think would be better for Yahoo in the long run -- Microsoft or Google?