Yahoo bid 'should get approval'

Microsoft and Yahoo are both struggling to compete with Google

With US politicians due to meet later this week to discuss Microsoft's offer for Yahoo, analysts ultimately expect any deal to secure regulatory approval.

As Yahoo's board mulls Microsoft's $44.6bn (£22.4bn) takeover proposal, a key congressional committee said it will scrutinise the bid on 8 February.

Members of the US Congress Judiciary Committee said any sale of Yahoo would raise important competition issues.

European regulators have said they would give the deal a fair hearing.

Competitive landscape

In a joint statement, Congress Judiciary Committee members Congressmen John Conyers and Lamar Smith said Microsoft's bid was "certainly one of the largest technology mergers we've seen".

At the end of the day, it's hard to see how regulators could reject this Analyst Evan Stewart Zuckerman Spaeder

They added that it "presents important issues regarding the competitive landscape of the internet".

"The Committee will hear from experts who will weigh in on whether this proposed consolidation works to further or undermine the fundamental principles of a competitive Internet," they said.

Microsoft's relationship with European Union competition authorities is far more strained than that with those in the US.

In 2004 the European Commission fined Microsoft 497m euros for abusing its market dominance, a ruling the US company finally lost on appeal in September last year.

The Commission has since launched two new competition inquiries against Microsoft.

Yet Competition Commissioner Neelie Kroes has said that this continuing legal dispute would have no baring on approval for any takeover of Yahoo.

Challenge Google

Analyst Evan Stewart of Zuckerman Spaeder said regulators on both sides of the Atlantic would likely approve any successful Microsoft bid for Yahoo, because Google is currently so dominant in the internet search engine market.

"At the end of the day, it's hard to see how regulators could reject this," said Mr Stewart.

Fellow analyst William Mahnic of Case Western University agreed.

"The big thing here is that Google has such a huge share," he said.

Yahoo said its board was evaluating Microsoft's approach "carefully and promptly".

Both it and Microsoft have been struggling to compete with Google.