Google (GOOG) Disrespects Microsoft (MSFT) Buy-Out Offer For Yahoo! (YHOO)

Google (NASDAQ: GOOG) certainly does not want to see Microsoft (NASDAQ: MSFT) buy Yahoo! (NASDAQ: MSFT). It would allow Microsoft to spread its search features across a much larger audience. It would also create a display ad powerhouse.

But, display advertising is not growing very fast. Google still has 60% of the much more profitable search business in the US and does very well overseas.

Google management cannot help itself from finding ways in which the proposed buy-out will hurt people who use the internet. Recently the search company’s CEO Eric Schmidt told Reuters "We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."

There was nothing subtle in the statement. Schmidt would like observers, including regulators, to think Microsoft would use the new, larger platform to push its software and other products to consumers who simply want to use the internet for information and entertainment.

Redmond management is not that stupid. There is almost certainly an understanding that hurting the customer experience will drive people away to Google and other places that offer portal-like services.

And, Google does not have clean hands in the matter. It markets its online applications business though its main website along with its mapping and online payment systems.

There is more than a little hypocrisy in Google’s position.

Douglas A. McIntyre