Microsoft'sproposed partnershipwith Yahoo is to face tougher
scrutiny from US antitrust regulators than initially
expected.
Although regulators blocked
Yahoo's deal with Google, the proposed alliance with Microsoft
joins two much smaller companies and was expected to get easy
approval.
The two would-be partners also argue that only by joining forces
will they be able to challenge Google's dominance of the search and
associated advertising markets.
But antitrust experts have warned that US regulators sometimes
oppose mergers between number two and three players, according to
the
Financial Times.
US authorities have objected to the formation of duopolies in
the past because of concerns of collusion to block all other
competition, according to a former DoJ official.
The Federal Trade Commission controversially blocked Heinz from
buying Beech-Nut, even though Gerber controlled two-thirds of the
market.
This means Microsoft could face tough scrutiny from US
anti-trust regulators and have to put up a fight as Oracle did to
acquire PeopleSoft to boost competition with SAP.
Microsoft also needs approval from European anti-trust
regulators, but analysts expect little resistance because of
Microsoft and Yahoo's very small market shares in Europe.
The Australian competition watchdog has confirmed it will
investigate the proposed Microsoft/Yahoo search partnership,
according to
local
media reports.
The
Australian
Competition and Consumer Commission is expected to look at the
deal's potential impact on local advertising and media markets.
The deal has unusual implications for the Australian market,
where both Yahoo and Microsoft operate joint-ventures, through
Yahoo7 and Ninemsn.
Meanwhile advertising agencies are urging Microsoft and Yahoo,
according to the
FT, to accelerate their search partnership to ensure an
effective challenge to Google.
They say the planned two-year integration process is too long as
Microsoft and Yahoo could lose focus while Google continues to
innovate, particularly in search.
Advertisers are hoping that a stronger competitor to Google will
accelerate the fall in prices for search terms already initiated by
the downturn.