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  • Steven Woda

Daily Roundup for 2008-02-06

It has been a big week of news related to Microsoft’s unsolicited bid for Yahoo!. Today, I thought I would try to provide you with a link to series of articles and analysis on this big Internet development.

Most of the talk about Microsoft’s hostile offer for Yahoo has focused on whether the deal could tip the scales in the battle for Internet dominance. Today, I’d like to steer the conversation to something a little more basic that almost everyone has overlooked: the numbers.

On its own, Yahoo is a stumbling Internet giant. But to Microsoft and Google, two of the world’s most powerful technology companies, control of Yahoo has come to represent an unmatched strategic prize. Now the duel over Yahoo, initiated by Microsoft’s surprise $44.6 billion offer last week, has set off a policy and public-relations battle between the corporate rivals that revolves around a simple question: Which company, Google or Microsoft, most threatens to become an Internet monopoly?

Concluding that neither company can successfully take on Google by itself, Microsoft (MSFT) launched an unwelcome takeover bid for Yahoo (YHOO). Microsoft said Feb. 1 it will pay $44.6 billion, or $31 a share, for Yahoo. The offer represents a 62% premium over Yahoo’s closing share price Jan. 31.

Google Inc. Chief Executive Eric Schmidt called Yahoo Inc. CEO Jerry Yang to offer his company’s help in any effort to thwart Microsoft Corp.’s unsolicited $44.6 billion bid for Yahoo, say people familiar with the matter. The approach Friday from Google — Microsoft’s chief rival on the Internet — came as Yahoo is assessing its options for responding to Microsoft’s aggressive "bear hug" bid, which has sent aftershocks through the media and technology industries since its announcement three days ago.

Microsoft’s $44.6 billion bid for Yahoo on Friday revived debate about AOL’s plan to remake itself as an online advertising company and whether it might too become a target for acquisition. AOL has been on a tear assembling an advertising network called Platform A that is meant to be the basis for the company’s future growth. At the same time, discussions have surfaced occasionally at AOL’s corporate parent, Time Warner, over whether the subsidiary should be spun out in part or whole.

Google executives are urging trade regulators around the world to look closely at Microsoft’s bid to buy Yahoo, a $44.6 billion proposal that they say threatens to quash competition, stifle Internet innovation and shrink consumer choice. The company issued its first public statement on the Microsoft deal yesterday, its first shot in what is expected to be a prolonged struggle between tech titans Google and Microsoft. Microsoft has run afoul of antitrust regulators because of its dominance and tactics in the PC market, Google’s statement noted. Now, with Microsoft proposing to buy Yahoo and extend further into online business, it could act again to stifle competition on the Internet, Google said.

If credible bidders don’t emerge to challenge Microsoft Corp.’s $44.6 billion offer for Yahoo Inc., the Web titan will likely have to resort to a tried-and-true method for securing a higher price: playing hard to get. Though Microsoft has signaled a willingness to "go hostile" by nominating its own slate of directors to take over Yahoo’s board, such a course would be risky, especially because Yahoo could try to scuttle a deal by raising antitrust issues.

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