The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Change could be coming at Yahoo!. Multiple suitors claim that they can leverage Yahoo!Õs online products and employees better than the current management. The leading bidder is Microsoft, whose $40 billion offer it is prepared to take directly to Yahoo! shareholders. The right move could lead Yahoo! to a new level of innovation and profit, while the wrong move could cause the companyÕs value to plummet. Unfortunately, the fate of Yahoo! will not be determined simply by who makes the best proposal to shareholders Ð but by whose proposal AmericaÕs antitrust bureaucrats arbitrarily deem sufficiently Òcompetitive.Ó Consider the Microsoft bid. If Yahoo! shareholders decide this bid is best for their company, they may be prohibited from moving forward. Antitrust enforcers could hold up progress for months deliberating whether the merger is ÒanticompetitiveÓ Ð and then possibly kill it altogether. Competitor Google is cheerleading this outcome, claiming that ÒMicrosoft plus Yahoo! equals an overwhelming share of instant messaging and web e-mail accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet.Ó But a Microsoft and Yahoo! combined market share offers no threat to competition whatsoever. Whether a market is competitive is not determined by the number of competitors or the percentage of customers that choose to buy their products; it is determined by whether companies are free to attempt to outdo one another to win over customers with superior products. The fact that someone is winning in a market by a large margin does not make the situation anti-competitive. It illustrates that competitive freedom has produced a company with superlative products. Google, Microsoft, and Yahoo! have high market shares only insofar as their products are more appealing to consumers than are their competitorsÕ. None of these companies, or any combination of two or even three of them, can force a consumer to use its services instead of a more attractive search engine or web portal Ð nor can it prevent competitors from outdoing it with superior products. A Microsoft-Yahoo! combination could not threaten competition. To the contrary, it would be an act of free competition, an ambitious attempt by two companies to improve their products by combining strengths. These antitrust laws should be called into question.
