There’s plenty of debate about how well a Microsoft-Yahoo combination will work, but almost none about the merger’s chances in front of anti-trust regulators. That’s because no one thinks U.S. officials, at least, will bat an eye at the deal.
Blair Levin, a former FCC chief of staff who’s now an analyst at Stifel Nicolaus, sums it up well: While the merger condenses the number of search players from three to two, it will be hard to prove that Microsoft-Yahoo is an anti-competitive threat, since they’d still be getting whupped by Google.
The basic argument for the deal relies on how Google is growing its lead and that to compete, Microsoft and Yahoo! need scale. As part of that argument, we think the companies will point to the fact that Google will remain the leader in the market even after the transaction and thus they will be able to argue that there will still be incentives for the combined companies to innovate.
Europe may be a different story, since the regulators there already have a proven animus for Bill Gates, Steve Ballmer, et al. And if the deal/review drags into January 2009, it’s likely that an Obama or Clinton administration will take a harder line than the current White House occupant will.
Update: The House Judiciary Committee will convene a Feb. 8 hearing to examine Microsoft’s proposed takeover of Yahoo.
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