Google is afraid of the potential of a Microsoft acquisition of Yahoo. On Sunday, Google posted a reaction on the takeover deal. Google's reply is well, amusing.
They cry wolf.They say that the deal is uncompetitive. I find that hard to accept when Microsoft+ Yahoo= a tiny fraction of Google's market share in ad and search traffic. They are also crying foul saying that Microsoft is the big evil machine. This is an easy thing to do in the valley. Everyone hates Microsoft in the valley. Flickr even has a protest group. The valley is home to the anti-Microsoft camp: Oracle, Sun, Apple, and Google. Lots of people in Silicon Valley will automatically say "Microsoft is Evil!" when prompted just as people will automatically say "Down with Bush!" when promoted at a Clinton rally. Why do they hate Microsoft? They are the "evil empire" of course. Microsoft is big, owns too much market share, and is arrogant according to the valley faithful.
But Google has to look in the mirror. They are the big 800 lb gorilla everyone is afraid of! Not Yahoo, not Microsoft!
Google is the reason that Yahoo has failed as a company and is a takeover target. Yahoo use to be the sizzle of the Internet, now Google destroyed them. Google is the reason why the most profitable company of all time, Microsoft, is scared and doing such a bold move. Yahoo may be Microsoft’s last hope to be a meaningful player on in a Web.20 world. Who's to blame? Google. Google is the big bad machine nowadays.
Back to the deal, Yahoo has three choices.
First they can ride out the offer and try to stay independent. That is unlikely since the company is in such deep trouble. They may also face shareholder lawsuits if they reject Microsoft's offer. Maybe they can take hedge fund money or be acquired by an European telecom or take money from a sovereign wealth fund.
Second they can outsource their search and ads to Google and focus on being a portal. They may raise their revenue by 25% in doing so according to the Wall Street Journal. This would be a total surrender. (Remember it was Yahoo that put Google on the map!) The DOJ may get involved in this case since Google would own search except for smaller players like MSN and Ask.
Third option is to take the Microsoft offer. This is the most likely outcome.
There is likely to be some DOJ action on this case, however, a Yahoo-Microsoft deal would make an actual attractive competitor to Google. Absent of the deal, Yahoo has to do something, most likely outsource the search and ads to Google. Google could be a very dangerous company without any real competition (Microsoft's AdCenter is a poor competitor) in the search advertising space. They would be more evil then Microsoft on the desktop.
Google knows this. This is why their CEO phoned Yahoo and said that they will give Yahoo any "help" they need to fight off the takeover. The status quo suits Google well. That is why they are arguing for it.
But there is no more status quo. If the DOJ blocks the deal and Yahoo remains independent, Yahoo will not remain independent for much longer. Someone else will acquire them, Yahoo is in too much trouble.
Google is afraid. They should be. Their world is about to change drastically. Their share price dropped almost 10% since this deal was announced. If the deal goes through, Microsoft will eventually lose the evil empire title and Google will be crowned the new king of evil. Funny since their motto is "do no evil."