Chowrangi

Responding to Microsoft’s hostile takeover bid for Yahoo, Google has taken over the role of a wedding spoiler.

As the New York Times reports, Google has publicly denounced the pairing as a threat to competition that need to be examined by policy makers around the world. Google identified instant messaging and Web email accounts as areas where a Microsoft-Yahoo combination would have “an overwhelming” market share. Google questions whether Microsoft could use its “PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, [instant messaging] and Web-based services.“

Google lobbyists in Washington are plotting a case against Microsoft-Yahoo transaction to lawmakers. Google could benefit by simply prolonging a regulatory review until after the next president takes office.

Eric Schmidt, Google CEO, has placed a call to Yahoo!’s chief, Jerry Yang, offering Google’s help to thwart off Microsoft’s hostile-takeover bid. Google has also launched “back-channel” negotiations with allies like Time Warner, who owns AOL in which Google has 5 percent stake, to seek possibilities of a counter-acquisition call.

According to WSJ, Yahoo already had been in negotiations in recent weeks to outsource its Web-search advertising in Europe to Google. Since last year, investors have called for Yahoo to abandon its own search advertising system, which generates significantly less ad revenue for each consumer search, and use ads from Google in return for a majority share of the revenue. Citigroup Global Markets analyst Mark Mahaney estimated that Yahoo could boost its cash flow more than 25% annually by outsourcing all its search advertising to Google.

Google’s effort to derail or delay the deal on antitrust grounds mirrors Microsoft’s own actions with respect to Google’s bid for the online advertising specialist DoubleClick for $3.1 billion, announced in April.

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