A confident Microsoft said it expects to get federal approval for its Yahoo purchase this year, but some experts say not so fast.
The company faces a review by the U.S. Department of Justice or the Federal Trade Commission. The European Commission will also review the deal. There are several potential obstacles:
• Privacy will become “a central issue” in the antitrust review, said Peter Swire, law professor at Ohio State University law school. “The search engines have been competing this year with new privacy features. The key antitrust question is whether the proposed merger will substantially affect that competition in search privacy,” Swire said.
• What Microsoft does with Yahoo’s portal and services such as e-mail is another issue likely to trigger challenges. If it bundles those with the Microsoft operating system, “that’s going to be problematic,” said David Lisi, a partner with the East Palo Alto office of the Howrey law firm.
• The deal would give Microsoft most of the market for Web-based e-mail and instant messaging. That could be challenged. “The concern is, you can serve as a gatekeeper to the Internet, and you could collect information from users, parcel it out and sell it to third parties,” Lisi said. Microsoft could also use that dominance to discourage competitors from getting into those areas.
It could take a year for the U.S. government to review the proposed deal, putting a decision over to the next administration, said antitrust expert Carl Tobias at the University of Richmond, Va., law school.
“The Bush administration has been rather lenient in its discharge of antitrust duties, but I would expect a new Democratic administration, perhaps even a McCain administration, would be more stringent,” Tobias said.
Ultimately, though, the deal may not face serious challenge, said Gary L. Reback, of Carr & Ferrell in Palo Alto. “Unless somebody high up in Yahoo convinces a lot of people he can do a better job than somebody who’s going to take over his company, it’s going to be hard to get the government to launch a thousand ships to stop the deal,” Reback said.
