Legal News

Microsoft-Yahoo Deal Faces Antitrust Scrutiny

By Peter Lattman

Meet David Drummond, Google’s lawyer-in-chief. The first public sign that the search giant might have some issues with a Microsoft-Yahoo combination came yesterday when in a blog post Drummond, a Wilson Sonsini alum, asked whether Microsoft could “now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC.” He went on to accuse Microsoft of “frequently [seeking] to establish proprietary monopolies — and then [leveraging] its dominance into new, adjacent markets.”

Microsoft GC Brad Smith, who has some experience battling antitrust critics, responded in a statement that “The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising.” Smith added that “the alternative scenarios only lead to less competition on the Internet.”

The WSJ says the bid is expected to get a hard look from European and U.S. antitrust enforcers and lawmakers, possibly delaying a completed deal for six months or more. But merger-law experts predicted that a buyout ultimately would win approval. In any case, Google’s aggressive antitrust attack ain’t suprising. “Google can tap into all of the ill will that Microsoft has created in the last couple of decades on the antitrust front,” Eric Goldman, a law prof at Santa Clara U. told the Times.

Interestingly, lawyers pointed out that the electoral calendar could have been a factor in Microsoft making a move. Matthew Cantor, a lawyer with Constantine Cannon, told the WSJ that with a year left of relatively lax Bush-administration enforcement, it made sense for Microsoft to act now. Carl Tobias, a law professor at the University of Richmond, told the Times that an antitrust review could take time and “may well bleed into a new administration with an entire new view on antitrust than the Bush administration.”

Who are the M&A big wigs advising on the mega deal? Advising Microsoft are a trio of lawyers at Simpson Thacher – Casey Cogut, Kathryn King Sudol and Alan Klein. On the regulatory side, the software giant is looking to Rick Rule at Cadwalader. Counseling Yahoo is Skadden Arps, led by Kenton King.

Full post as published by Law Blog - WSJ.com on February 04, 2008 (boomark / email).