Feeds

FTC and DoJ will fight for the right to rule on YaMicrohoosoft!

Online ads vs. Windows scrap

Boost IT visibility and business value

!!!!! Would YaMicrohoosoft! hamper market competition? If Jerry Yang finally agrees to be swallowed by Steve Ballmer, that's a question for regulators in the US as well as the EU. But first, another question needs answering: Which US regulator will review the acquisition: the Department of Justice (DoJ) or the Federal Trade Commission (FTC)?

"There will likely be an arm-wrestling contest between the Justice Department and the FTC on this," says Mark Ostrau, co-chair of the antitrust and unfair competition group at the Silicon Valley law firm Fenwick & West. "Both have claims to this in one way or another."

The FTC typically handles deals in the online advertising market. It just reviewed Google's acquisition of online-ad firm DoubleClick. But the DoJ is, shall we say, more familiar with Microsoft.

In 1998, the Department of Justice joined 19 US states and the District of Columbia in filing antitrust lawsuits against the Redmond software giant over its Windows operating system and applications, and ever since settling with Microsoft in 2002, the DoJ has monitored the company's business operations in accordance with an antitrust consent decree.

If Yahoo! approves the proposed $44.6bn deal, the two regulators will sit down at the bargaining table to determine which one is better equipped to review it.

"There is a clearance process between the two agencies so that they never look at the same transaction," says Howard Morse, a former assistant director of the bureau of competition at the FTC and now a co-chair of the anti-trust practice at the stateside law firm Drinker, Biddle & Reath.

Whichever regulator tackles the task, the other may provide assistance. "There have been very rare situations where there's been some sharing of expertise, where staff of one agency was 'on loan' to the other," explains Ostrau. "And this could be one of those rare occurrences."

But as we see it, the DoJ should take the lead, since the issues at hand outstrip the FTC's traditional online ad-watching domain.

If Yahoo! and Microsoft merge, their combined online ad operation still wouldn't match the one headquartered in Mountain View. Google controls 60 per cent of the search market, and DoubleClick, which Google will buy as soon as regulators let it, is by far the dominant player in the display ad market.

"Right now, you have one player that owns the market: Google," says Ted Henneberry, co-chair of the European practice group at the international law firm Heller Ehrman, who's dealt with anti-trust issues on both sides of the Atlantic.

But a Yahoo!-Microsoft deal would extend well beyond the online ad market. "There would be concern with significant consolidation in a number of areas," says Ostrau. "There's certainly the advertising market, including search advertising and other areas of online advertising. But we're also talking about consolidating two web-based email systems, two online communities, and so on."

The big question is whether Microsoft would gain an unfair advantage by dovetailing Windows with Yahoo!'s search and ad technologies. "There is a potential for Microsoft to leverage its operating system," says Ostrau.

Couldn't Microsoft pull this trick with its home-grown online technologies? Of course. Google has specifically asked to the DoJ to prevent Redmond from doing so. But this becomes an even bigger issue if Microsoft acquires Yahoo!

"When Internet Explorer was first used with Windows, it wasn't that good. People still used Netscape," says Ostrau. "But once Internet Explorer was good enough, the bundling had a big effect. It's one thing to put MSN search on Windows. It's another to put Yahoo! on there too. The more attractive a technology, the more effective the bundle."

Clearly, this is a job for the DoJ.

Let's just hope they can keep a straight face. First, the DoJ slaps Microsoft for monopolistic practices in the operating system market. Then Microsoft complains that Google is threatening to build a monopoly in acquiring DoubleClick. And then it turns around and tries to acquire Yahoo!, an acquisition that makes the Google-DoubleClick deal look piddling.

"Every company is guilty of talking out of both sides of their mouth," says Ostrau. "But regulators understand that."

Bootnote

And then there's the bigger question: If Microsoft acquires Yahoo!, what happens to The Register's Yahoo! headlines? ®

The Essential Guide to IT Transformation

More from The Register

next story
Just TWO climate committee MPs contradict IPCC: The two with SCIENCE degrees
'Greenhouse effect is real, but as for the rest of it ...'
Adam Afriyie MP: Smart meters are NOT so smart
Mega-costly gas 'n' 'leccy totting-up tech not worth it - Tory MP
'Blow it up': Plods pop round for chat with Commonwealth Games tweeter
You'd better not be talking about the council's housing plans
Arrr: Freetard-bothering Digital Economy Act tied up, thrown in the hold
Ministry of Fun confirms: Yes, we're busy doing nothing
Help yourself to anyone's photos FOR FREE, suggests UK.gov
Copyright law reforms will keep m'learned friends busy
Apple smacked with privacy sueball over Location Services
Class action launched on behalf of 100 million iPhone owners
UK government officially adopts Open Document Format
Microsoft insurgency fails, earns snarky remark from UK digital services head
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Backing up Big Data
Solving backup challenges and “protect everything from everywhere,” as we move into the era of big data management and the adoption of BYOD.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.