Google Says Micro-Hoo Would Hurt Internet

Published: March 19, 2008

by Alex Woodie

Google CEO Eric Schmidt this week said that if Microsoft succeeds with its acquisition of Yahoo, it would hurt the openness of the Internet. Meanwhile, Yahoo reaffirmed its financial outlook despite the possible acquisition by Microsoft looming over its head.

"We would be concerned by any kind of acquisition of Yahoo by Microsoft," Schmidt told reporters while in China this week. "We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."

Yahoo, like Google, relies on open source Linux software to power the thousands of servers used to serve up search results, correlate key word advertising, display videos, and do the hundreds of other little things that the Internet giants do. Microsoft has said that, if its acquisition succeeds, it would not immediately replace the Linux servers with servers running its own Windows operating system. But it left open the possibility of a long-term shift to Windows.

Schmidt did not go into specifics of why he thought the combination of companies would be bad for openness on the Internet. Instead, he pointed to Microsoft's history, and "the things that it has done that have been so difficult for everyone."

This is not the first time Google has spoken out against Microsoft's intended acquisition of Yahoo, which was announced February 1. In the days following Microsoft's announcement, Google executives expressed concerns that the combination would result in less competition for Web search results and keyword advertising. Microsoft executives contested that assumption, and said the combination of the two companies would actually result in more competition, since Google would have a legitimate competitor, instead of two significantly smaller and less-capable competitors.

It is somewhat ironic that Schmidt would make the comments about openness while in China. In recent days, the Chinese government has blocked the ability of its citizens to access the video sharing Web site YouTube, which has recently been broadcasting videos of civil unrest from Tibet and other Chinese holdings. YouTube was bought by Google last year.

Meanwhile, Yahoo took the opportunity yesterday to tell the world how well it's positioned for growth over the next three years.

While the company admitted recently that Microsoft's unsolicited $44.6 billion offer could hurt the company's ability to do business, any potential downside will be more than offset by increases in other areas, notably expected growth in display advertising.

According to Yahoo's announcement, the company is on pace to double operating cash flow over the next three years. That will see the company's cash flow hit $1.9 billion this year, and rise to $3.7 billion by 2010. "Yahoo is positioned for accelerated financial growth," says Jerry Yang, the company's co-founder and chief executive officer. "Combined with our recent progress in search monetization, Yahoo is well positioned to provide the broadest range of products to our advertisers while delivering the most compelling experiences to users."

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