NO RUNNING AWAY FROM DEAL
Google
is considering providing financing for an acquisition of Yahoo! by
another company or a group of bidders, according to a person who has
been briefed on the matter. The company may opt not to take part in any
offer and hasn't engaged in serious discussions with would-be partners,
said the person, who asked not to be identified because the
deliberations are private.
Yahoo is weighing strategic options after firing former chief executive officer Carol Bartz, in part for her failure to keep pace with Google in the online advertising market. Google, which is under regulatory scrutiny from governments around the world, may lend its financial support to preserve Yahoo as a rival and bolster competition in the Internet industry, said Greg Sterling, an analyst at Opus Research in San Francisco.
“If competition dissipates or diminishes, then the hand of regulators is strengthened,” Sterling said. “If competition is diminished or marginalized, then all the arguments about Google being a monopoly ring more true.”
Google, which has $42.6 billion in cash and short-term investments, is considering helping finance other bidders, rather than trying to acquire Yahoo outright, the person said. The US Federal Trade Commission began a review of Google's business practices, including search and advertising, the company said in a regulatory filing in June. The European Union and the state of Texas also have begun investigations of the company's leadership in search and advertising markets.
Potential financing by Google for a bid for rival Yahoo has parallels with the $150 investment that Microsoft made in competitor Apple in 1997 to help preserve competition in the computer market, Sterling said. Still, regulators might scrutinize any Yahoo acquisition effort that involves Google. The US government threatened to challenge an earlier proposal by Google to place ads on Yahoo's site, causing Google to abandon the effort in 2008.
Representatives of Sunnyvale, California-based Yahoo and Mountain View, California-based Google declined to comment.
Yahoo is weighing strategic options after firing former chief executive officer Carol Bartz, in part for her failure to keep pace with Google in the online advertising market. Google, which is under regulatory scrutiny from governments around the world, may lend its financial support to preserve Yahoo as a rival and bolster competition in the Internet industry, said Greg Sterling, an analyst at Opus Research in San Francisco.
“If competition dissipates or diminishes, then the hand of regulators is strengthened,” Sterling said. “If competition is diminished or marginalized, then all the arguments about Google being a monopoly ring more true.”
Google, which has $42.6 billion in cash and short-term investments, is considering helping finance other bidders, rather than trying to acquire Yahoo outright, the person said. The US Federal Trade Commission began a review of Google's business practices, including search and advertising, the company said in a regulatory filing in June. The European Union and the state of Texas also have begun investigations of the company's leadership in search and advertising markets.
Potential financing by Google for a bid for rival Yahoo has parallels with the $150 investment that Microsoft made in competitor Apple in 1997 to help preserve competition in the computer market, Sterling said. Still, regulators might scrutinize any Yahoo acquisition effort that involves Google. The US government threatened to challenge an earlier proposal by Google to place ads on Yahoo's site, causing Google to abandon the effort in 2008.
Representatives of Sunnyvale, California-based Yahoo and Mountain View, California-based Google declined to comment.
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