Google: Microsoft's Yahoo purchase might hurt Internet

Google’s Chief Executive Eric Schmidt is concerned with Microsoft’s proposed buyout of Yahoo. Schmidt said it will stifle the free flow of information on the Internet and will allow for bad decisions.

Microsoft has been planning to buy Yahoo for the last two months. Microsoft offered $44.6 billion to Yahoo but the offer was rejected because Yahoo believed it was too low. SInce then, however, reports indicate the two have met secretly and are negotiating. Google is concerned about this proposed merger; when Microsoft first made the offer, Google Senior Vice President and Chief Legal Officer, David Drummond, said Microsoft favors monopolies and the merger would make it too strong. He said this will be bad for innovation and openness on the Internet. And now Google CEO, Eric Schmidt, has similar concerns. Schmidt told reporters:

"We would be concerned by any kind of acquisition of Yahoo by Microsoft…We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."

Schmidt pointed to Microsoft’s past history and how they made it difficult for other companies to compete in the PC world. However, Schmidt did not give any specific examples. One obvious example of Microsoft throwing its power to quash competition happened when the company was competing with Netscape; Microsoft made its Internet Explorer browser the default, pre-installed browser in Windows and it effectively wiped Netscape out. Microsoft has continued this practice in an effort to compete with the Firefox browser, but Firefox has responded very well compared to the now defunct Netscape. European courts were also very vocal against Microsoft’s monopolistic tendencies; they upheld a landmark 2004 decision saying Microsoft abused the monopolistic power of its Windows operating system, causing damage to competitors. Microsoft was ordered to pay a record 497 million Euro ($695 million USD) fine. Schmidt told reporters:

"We are concerned that there are things Microsoft could do that would be bad for the Internet."

Microsoft Chief Executive Steve Ballmer has said the merger will help both Microsoft and Yahoo gain significant market share in online advertising and web search. In a recent Reuters poll of financial analysts, an overwhelming majority believed Microsoft will succeed in buying Yahoo. However, many also said Microsoft is not making the best use of their cash reserves.