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Apple would be a better acquirer for Yahoo! Than Google, Microsoft

Posted October 23rd, 2011 in antitrust, Google, Microsoft, private equity, Yahoo and tagged , , , by Alton Drew

Hard to miss a post in The Wall Street Journal reporting on Microsoft and Google’s play for Yahoo!, the troubled Internet portal. Microsoft, according to the report, wants to help finance part of a bid by a private equity firm to buy Yahoo! Google has allegedly spoken to two private equity firms to help them finance the purchase of Yahoo! As well.

As if the U.S. Department of Justice doesn’t have its hands full with its lawsuit to stop AT&T from purchasing T-Mobile USA. Any whiff of a horizontal merger between Google and Yahoo would have advertisers crying foul, with allegations of any joining creating a rise in online advertising rates. The relevant market (galactic) and the relevant product (online advertising and Internet search) are obvious.

A better player for Yahoo! would be a company that has a less horizontal relationship and an appreciation for building a social community around its product. A company like Apple. An Apple combination would be more vertical in nature. Apple could argue that it is merely acquiring another platform through which it can sell some content and definitely its hardware. Yahoo would just be an expansion of its stores.

Apple can also argue that it’s not in the search engine business. It’s at the mercy of a Google algorithm just like any other product provider.

Granted, there will be a couple snickers at the suggestion that Apple is at the mercy of a Google algorithm.

An Apple-Yahoo! combination will benefit Yahoo! by propping up Yahoo!’s value and keeping the regulators away.