Google is rumoured to be lining up a bid to purchase Yahoo from under the noses of Microsoft which could have serious implications for the future of the Bing search engine.
A report in the Wall Street Journal suggests that Google has spoken to at least two private equity firms about financially backing a bid to purchase the ailing online portal.
However, any bid by Google to purchase Yahoo would be sure to attract the attention of regulatory bodies across the globe, considering Google is already under investigation for antitrust violations by the Federal Trade Commission in the US as well as the European Commission in Europe.
In the US, Google currently has around 65 per cent of the search market, which would be boosted to a monopolistic 80 per cent should it succeed in its purchase of Yahoo. Leaving Bing with a patlry 14 per cent.
Reports emerged last week that Microsoft is also considering a potential joint bid for Yahoo and has been in discussions with privates-equity firms, Silver Lake Partners and the Canada Pension Plan Investment Board. This type of deal which would see Microsoft extending loans to them and then buying preferred stock in Yahoo. This situation would allow Microsoft to recoup its investment before owners of common stock and some other types of investors.
Back in 2008, antitrust lawyers for the FTC thwarted a web-search advertising partnership deal between Google and Yahoo and instead in 2009 Yahoo signed a 10-year deal with Microsoft.
Google's renewed interest in Yahoo would see them attempt to sell advertising across Yahoo’s websites, as well as opening up Google+ to Yahoo’s 700 million monthly unique visitors. In the US, Google trails the likes of Facebook and Yahoo itself in terms of display-ad revenue and this deal would help it boost its position.
Yahoo last month fired its CEO Carol Bartz and has since been shopping itself to potential buyers, which could see the company taken off the public markets as it tries to turn its fortunes around.
With Microsoft’s online division continuing to make a loss, albeit with revenues growing, it will see a partnership with Yahoo as a way of expanding its online presence and challenging Google for dominance in the search market.
Source: Wall Street Journal