The Economist has an interesting article today concerning the proposed aquisition of Yahoo! by Microsoft. Most of the piece is a stright-forward recounting of events around the deal, from past offers that were rejected, to Yahoo’s current problems, the generous premium over Yahoo’s share price and Steve Ballmer’s determination.

The article concludes by suggesting that this attempted takeover of Yahoo! by Microsoft will end well for MSFT in the sense that even if the proposed deal is rejected by regulators, it will have the effect of bringing unwanted scrutiny on Google and their dominant (65.98%) search market share…Yahoo! as a kind of distraction, or decoy.

Google’s response by SVP David Drummond indicates that it is concerned about the merged-entity’s “overwhelming share of instant messaging and web email accounts”, whereas the reply from Brad Smith at Microsoft shows they’re worried about GOOG’s 2/3 search query market share in the U.S.

Google’s subsequent offer to help Yahoo! repel Microsoft could be read as an attempt to maintain ‘openness and innovation’, or by those more cynically inclined as an effort to keep Yahoo! as “straw man”…an easier target.

…here’s hoping the rest of us don’t end up as “straw dogs” in the web wars.

The Microhoo! hoo-hah - Economist, Feb 5 2008

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