WASHINGTON — After their long-running antitrust battles with Microsoft Corp., the last thing U.S. and European regulators want is for the software giant to get even bigger.
But as Google Inc. extends its dominance over the Internet, regulators are likely to view a more powerful Microsoft as the lesser of two evils and greenlight the proposed Yahoo deal, analysts said Friday.
"The simple notion is competition is good for consumers," said Robert Hahn, executive director of the Center for Regulatory and Market Studies at the American Enterprise Institute, a Washington think tank. "Google may have a real rival now in online search and be subject to more competitive pressures in advertising. Regulators would take that into account."
That's not to say the proposed $44.6-billion takeover would be a slam-dunk. The U.S. Justice Department said Friday that it would review Microsoft's proposed acquisition, if accepted by Sunnyvale, Calif.-based Yahoo Inc., foreshadowing the intense scrutiny such a deal would face because of its size and Microsoft's history.
European regulators, who have been tougher on Microsoft in recent years, also would have to approve the deal.
In the U.S., the potential combination of two of the technology industry's biggest names already is drawing congressional attention. A House antitrust task force will examine the deal next week and Sen. Herb Kohl (D-Wis.), chairman of the Senate's antitrust subcommittee, promised Friday to hold hearings, saying he wanted to make sure the deal wouldn't harm competition or erode Internet users' privacy.
Lawmakers and regulators review major deals to determine if they will make companies too powerful by eliminating rivals that help keep prices down by competing for customers.
The loss of Yahoo, one of three major online search and advertising players, could potentially allow Google and Microsoft to dominate the market, leading to higher prices.
Microsoft said it expected the proposed Yahoo takeover to receive regulatory approval in the second half of the year. The Redmond, Wash.-based company's pitch to regulators would emphasize the benefits of a stronger counterbalance to Google, said Brad Smith, Microsoft's general counsel.
