Microsoft. Yahoo. Not Hostile.

microsoftyahoo An item on TechCrunch this morning pointed me at the official Google blog, where David Drummond (Google Senior VP and Chief Legal Officer) commented on the Microsoft bid for Yahoo. I think it's fair to say that a Google corporate officer blogging on a Google property (Blogger) constitutes their "official" response.

For an official response, it's pretty idiotic. For starters, Drummond twice refers to the letter sent to Yahoo's board by Steve Ballmer as a "hostile bid". Hmm. Is this a hostile bid? A hostile takeover? Let's look at that.

The president of one company sends an open letter to the board of another company, offering to buy that company at a significant mark-up over its current share price. Doesn't seem terribly hostile to me. But I'm no lawyer, so let's go see how others define "hostile" bids for acquisition...

Had Drummond used his own company's search engine's "Define: " syntax, he'd have found this:

googlehostiledefinition

 

 


Note the key element in there: without the approval of the target corporation's board. What was Ballmer's letter to Yahoo, if not a proposal for the board to consider? Had he searched Wikipedia, he'd have seen this:

A takeover which goes against the wishes of the target company's management and board of directors. opposite of friendly takeover.

... but that topic (Hostile Takeover) links to the "Takeover" topic. A key portion of that (from the Friendly and Hostile Takeovers section within the topic) is [my emphasis]:

When a bidder makes an offer for another company, it will usually inform the board of the target beforehand. If the board feels that the offer is such that the shareholders will be best served by accepting, it will recommend the offer be accepted by the shareholders. A takeover would be considered "hostile" if (1) the board rejects the offer, but the bidder continues to pursue it, or (2) if the bidder makes the offer without informing the board beforehand.

Seems to me that neither of those conditions were met. On (2), the bidder (Ballmer on behalf of Microsoft) did inform the board beforehand. And until/unless Yahoo's board rejects the offer and Microsoft continues to pursue, then condition (1) won't be met either.

Drummond's not totally alone, though... it seems that some in the media are also joining the bandwagon. ABC News has a story that refers to the bid as "hostile" several times... and quotes Kara Swisher as saying "Yahoo had been rebuffing Microsoft's overtures for the past year"... and "You don't tend to try to do a hostile takeover in the Internet space because people just leave," Swisher said. "So it's very unusual Microsoft is attacking Yahoo in this way." "Attacking"? Hyperbole much?

However, Swisher's perspective on the matter is hardly without bias. Just three weeks ago, she was writing that there was no way that Microsoft would acquire Yahoo. She called rumors of Microsoft looking at Yahoo "a tad ridiculous" and, when referring to discussions between former Yahoo CEO Terry Semel and Steve Ballmer, she has this to say [my emphasis]:


It never happened then and will not now.


So how do you get from "it never happened then and won't now" to "they've been rebuffing overtures for the past year"? Then again, I suppose telling ABC News that she frankly doesn't know and was completely off the mark just three short weeks ago isn't the shortest route to a juicy soundbite.

For their part, Yahoo makes it clear in their own official response (published late Friday) that they're reviewing the "unsolicited" bid. Not much else they can see for now, I suppose.

Earlier today, Brad Smith, Microsoft's chief counsel, posted a response to Google's statement. It's a fairly short statement, with the investment relations boilerplate being longer than the statement itself, but these numbers are worth noting:

According to published reports, Google currently has more than 65 percent search query share in the U.S. and more than 85 percent in Europe. Microsoft and Yahoo! on the other hand have roughly 30 percent combined in the U.S. and approximately 10 percent combined in Europe.

It would be nice to know which "published reports" he refers to, but certainly Google's domination in search query share can't be argued. They're a verb at this point (and for good reason... Google's search does rock!).

So now it'll turn into a war of the words... cue the rhetoric and grab your popcorn. Should be an interesting ride.