Many Question Google`s Intent in Bidding Wars for Yahoo

The bidding wars for Yahoo got a bit more interesting this week, as Google has now been added to the list of potential suitors that already includes Microsoft. While some believe Google has legitimate intentions of purchasing Yahoo to increase its power in the tech industry, others believe the company’s involvement in the bidding process may just be a ploy to drive up the price to help weaken competitors in the long run.

Earlier this week, the Wall Street Journal cited unnamed sources to report that Google has solicited the help of two or more private equity firms to aid in the bidding for Yahoo.  Several reports had already discussed Microsoft’s interest to offer a new bid for Yahoo in recent weeks, and it appears as if Google has been paying attention.  While Google’s discussions with private equity firms are not entirely formal as of yet and lack a true proposal, the move does show that the company refuses to sit still as its competition remains active.

As for Google’s intentions, analysts are split.  Some believe Google truly wants to acquire Yahoo for itself, while others say it is just trying to inflate the price to put a major dent in competitors’ wallets.  Technology Business Research analyst Ezra Gottheil believes Google is genuine in its efforts.  He said: “For the right price, and if it can get past the regulators, yes Google wants it.  Google is a machine that turns its users into profits. This is an acquisition that makes more sense for Google than Microsoft.”  Gottheil added: "I don’t play an antitrust expert on TV, but I’d imagine this one would get some scrutiny.  But it’s a good idea. Yahoo has users and subscribers. It fits Google’s business model. The single largest asset is the Yahoo mail and group users." 

The flip side of the argument is presented by Zeus Kerravala, an analyst with ZK Research: "My guess is that Google is driving the cost up for Microsoft.  I don’t think Yahoo does anything that Google doesn’t, so they don’t need them. And anything that causes a delay to Microsoft executing on something is good for Google."  Kerravala noted that causing Microsoft to pay a higher price for Yahoo would be advantageous for Google, as it would diminish the amount of funds to be used in other competitive ventures.

For more on this topic, visit http://www.pcworld.com/businesscenter/article/242463/google_bidding_for_yahoo_or_driving_up_cost_for_microsoft.html

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