Far from stifling competition in the search market as some fear, Microsoft's acquisition of Yahoo would enhance it, the Associated Press quotes Microsoft CEO Steve Ballmer as saying. Ballmer claims that a Microsoft with Yahoo under its wing would act as a counterweight against Google, stimulating competition in the market. "Google's clearly got a dominant position. They've got about 75 percent of paid search worldwide," Ballmer asserts, adding that any alternatives to the Yahoo acquisition "would be less good" from a competition perspective.
Microsoft's stated aspirations for a more competitive market could turn against it. Reuters cites a source "familiar with Yahoo's strategy" that says Yahoo could rebuff Microsoft's offer by choosing to form a business alliance with Google. Indeed, Microsoft's $44.6 billion bid may be 26% above Yahoo's market value, but Yahoo management reportedly believes it "undervaluates the company."
However, Yahoo's board of directors is in the process of evaluating Microsoft's offer, a course of action the Web company says can "take quite a bit of time." Reuters also quotes an internal Yahoo memo that says, "We want to emphasize that absolutely no decisions have been made -- and, despite what some people have tried to suggest, there's certainly no integration process underway."