Microsoft and Yahoo were pushed to the brink of a multibillion-dollar marriage and then, this weekend, to a sudden breakup by the same player. It was Google in the odd dual role of both unwitting matchmaker and self-interested spoiler. Google’s phenomenal rise, after all, prodded Microsoft — the dominant technology company for more than two decades — to court Yahoo. And Google’s success also weakened Yahoo enough to give Microsoft the sense that it could buy the company at a good price.A combined Microsoft-Yahoo would create a powerful competitor, and Google early on indicated that it would fight the merger on antitrust grounds in Washington and Brussels. But Google played a part in killing the deal, for now at least, by acting more as friend than foe. It offered to let Yahoo use its more sophisticated search advertising technology, which by some estimates would have meant $1 billion in additional cash flow a year for Yahoo. The prospect of such a partnership emboldened Yahoo’s board to demand more money for the company and eventually caused Microsoft to rethink its strategy. Steven A Ballmer, Microsoft’s chief executive, cited the proposed Google partnership as the main reason for not pursuing a hostile bid and instead walking away on Saturday.“Such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us,” he wrote to Jerry Yang, Yahoo’s chief executive, and cited five specific reasons Google would be bad for Yahoo.Yahoo may well pursue the partnerships with Google to bolster its depressed stock price. Yahoo shares dropped 15 per cent, or $4.30 Monday, to $24.37. The two companies refused to comment. Not surprisingly, analysts are saying the Microsoft-Yahoo story has one clear winner — Google. And its stock price reflected that thinking on Monday. More than $4 billion was added to Google’s value as the stock price rose 2.34 per cent. Not yet 10 years old, Google has emerged as a powerhouse wielding tremendous power in the world of technology and beyond. It was able to influence a government auction of broadcast spectrum. It nudged several cellphone companies into opening up their networks to the phones of rivals. It is the combination of Google’s economic power and unbounded ambition that strikes fear in the world of technology, advertising, media and telecommunications. In part that is because Google wields power more subtly, and perhaps more effectively, than other big companies ever have.
