Microsoft Corp’s $44, 6 billion bid to acquire Yahoo! has shaken the international web world. Unpredictable and surprising changes in strategy in the still yet to end game, and the hypotheses on possible scenarios that may result from such a financial operation, are quite disconcerting, especially considering the possibility of the suppression of one of Internet’s best peculiarities: freedom.

Microsoft took advantage of Yahoo’s! moment of weakness to come forward with a proposal to acquire Filo and Yang’s company with a $44,6 billion bid, equivalent to $31 per share.

The motivation behind the Hi-Tech giant Redmond’s take-over bid was to definitely limit Google’s power or at least to represent a strong competitor for the High-Tech giant from Mountain View.

Google reacted right on time with its offer to establish a partnership with Yahoo! allowing it to keep its independence assured, and at the same time encouraging other companies, like Time Warner (AOL owner) to make a better offer.

Furthermore, a few days after the acquisition offer, The Official Google Blog raised a number of troubled questions about the improper influence Microsoft could exert through the same monopoly it has with PC, by unfairly limiting the ability of Redmond’s company consumers to freely access competitor’s emails or alternative web-based services.

Microsoft’s reply was just as well-timed. They explained that the acquisition: “would create a more competitive market giving birth to the second world competitor in the fields of Internet Search Engine and online advertising”.

In the meantime Yahoo! has reacted extremely calmly, first by they carefully examined the offer, then, after evaluation, they decided to reject it with the justification, according to Yang, that $31 per share does not reflect the market value of the company. This is the official reason declared by the company with a press release: “After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, and our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders”.
Gianluca Cozzolino, Ciaopeople’s CEO made this comment on the evolution of events regarding this important negotiation in the web world: “For Microsoft, the acquisition of Yahoo! would mean the possession of the second world search engine as far as traffic and the possibility to challenge Google in the online advertising market. Yahoo’s refusal could be a strategy to raise the bid giving the feeling of a possible partnership with Google. Two are the main problems that would arise from such a strategy: violation of antitrust either in case of Microsoft acquisition or in the case of Google partnership and the threat of limited internet freedom”.

At this point Microsoft sees, two possibilities: either accept the Yahoo! alternative offer or proceed with a hostile takeover trying to climb to the top of the company without the consent of the board. This hypothesis is quite risky; a financial war would cause a huge amount of economic losses and a waste of energies that would make the operation inconvenient.

Discarding the possibility of an attempt by Yahoo! to raise the bid, the other scenario would be the acceptance by Google of an offer launched by Wall Street Journal to form a partnership to assure Yahoo! independence. This offer, however, just as the Microsoft one, would fall into the antitrust ban.

In light of the above it is important to understand what the internet scenario would be like if Yahoo! were actually bought by Microsoft.

The vision outlined by Zambardino in his blog is interesting and disconcerting. He discusses “ bipolarism” with Microsoft-Yahoo! on the one side and Google on the other: “Let’s try to imagine the world with these two (Microsoft and Yahoo!) merging. Their strength would give life to the largest concentration of visitors (shared between two competitors), of traffic, advertising income, and the potential to devour any other competition. It is the triumph of the ‘high part of the curve’. If we track American internet traffic, or even the Italian one for that matter, on a graph, it is obvious that the Yahoo!-Microsoft partnership and Google have the lion’s share ”.
A double monopoly, with two big companies involved in a cutthroat competition for the advertising market trying to grab at any means , from entertainment to telephones in order to include whatever is vital for the striving of its economic system.

Zambardino talks about “desertification” to describe this mechanism: “…they will both starve: to win the war that is about to start they will have to swallow bigger and bigger portions of other means (media?), subtract customers, money from advertising, vital space. They will have to literally delete them, or in the best case scenario, keep them under strict control.

A probable but devastating hypothesis would be the representation of internet as a mere business, a market to monopolize and centralize, nullifying the meaning of freedom and democracy that has characterized it so far.

Simona Fiore

Magazine Editorial Staff

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