Microsoft Execs: Yahoo Will Help Us Fight Google

Microsoft executives, taking aim at perhaps the company's biggest strategic threat, said their proposed takeover of Yahoo would combine to form an Internet and software powerhouse that would offer the market a compelling alternative in online advertising and search to Google.

In a 30-minute conference call with press and analysts to discuss their proposed $44.6 billion buyout of Yahoo, Microsoft brass also suggested that despite its own antitrust issues in the past that Microsoft, not Google, could pass regulatory muster in such a deal.

"A year ago, the Yahoo management team told us it really wasn't the right time to discuss any acquisitions," said Steve Ballmer, Microsot's CEO. "We believed then on the benefits of combining the two companies and we believe in those benefits today, more than ever."

Microsoft and Yahoo have each been long flummoxed by the dominance of Google in search, advertising, online media and mind share, but neither company has yet gained any noteworthy traction in the fight against Google. Kevin Johnson, president of Microsoft's Platforms and Services Division, said Microsoft's deep pockets combined with Yahoo's core competencies could change that.

"This is a business that requires significant investment in servers, data and infrastructure," Johnson said. "You see this industry going through a period of consolidation. Today, the market is increasingly dominated by one player. We can offer a more competitive choice for consumers, advertisers and publishers... a more credible alternative in search and advertising."

Johnson later said that because of Google's dominant market position in search, it, not Microsoft, would be prevented from making a bid for Yahoo under U.S. antitrust laws.

In a prepared statement, that went public at about the same time Microsoft's conference call began, Yahoo was non-committal.

"Yahoo! Inc., a leading global Internet company, today said that it has received an unsolicited proposal from Microsoft to acquire the Company," Yahoo said in a press release. "The Company said that its Board of Directors will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders."

Perhaps the person who sounded most excited about the proposed deal was Ray Ozzie, Microsoft's chief software architect, who sounded an upbeat note about the potential for combining Yahoo's technical team with Microsoft's.

"Over the course of the past 10 years, our lives, our businesses, even our society has been progressively transformed by the Web," Ozzie said. "Email and IM enable us to send messages to each other across the globe. Beyond the portal, search plays a pivotal role in how we research, how we shop.

"The social platform will progressively become a new entry-point for all the Web can offer," Ozzie said. "Yahoo has played a key role in the growth and evolution of the Web. We have tremendous respect for the engineering team and the work they've done. Yahoo has tremendous community and content assets - - assets ranging from business and personal productivity."