An Interesting Theory on Microsoft-Yahoo

Cite this Article
Joshua D. Wright, An Interesting Theory on Microsoft-Yahoo, Truth on the Market (February 06, 2008),

The Economist (HT: sketches out an interesting theory on the proposed Microsoft-Yahoo merger:

The only grounds on which a trustbuster could plausibly oppose Microsoft buying Yahoo!—that it is possible to exercise monopoly power in online search and advertising—surely apply even more strongly to Google. Indeed, some antitrust experts are surprised that Google has not already come under serious assault from the trustbusters, especially because, as Mr Ballmer points out, the “one player†has been “consolidating its dominance through acquisition.â€

Indeed, even if Microsoft believed that it would be prevented from buying Yahoo! on antitrust grounds, it might make sense to push for the deal, if only to force the antitrust authorities to take a serious look at issues of market power in the online search and advertising market, which would inevitably lead them to Google.