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Last Updated: Monday, 17 March 2008, 11:24 GMT
Microsoft's moves 'threaten net'
Eric Shmidt
Mr Schmidt says he is concerned about the openness of the net
Any deal between Yahoo and Microsoft could be "bad for the internet", according to the head of Google.

Chief executive Eric Schmidt said that Google was "concerned" about a deal and said it could have implications for the "openness" of the internet.

Last month Microsoft proposed a buyout of Yahoo for $44.6bn, a deal that was rejected by Yahoo's board.

At the time, experts said that the buyout was an attempt by Microsoft to challenge Google's dominance.

"We would be concerned by any kind of acquisition of Yahoo by Microsoft," Mr Schmidt said at a conference in Beijing.

"We would hope that anything they did would be consistent with the openness of the internet, but I doubt it would be."

Last gasp

He highlighted the software firm's past history and "the things that it has done that have been so difficult for everyone".

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.

Yahoo billboard
Yahoo has tried to fend off the bid from Microsoft

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

"We are concerned that there are things Microsoft could do that would be bad for the internet," said Schmidt.

His comments echo those of David Drummond, Google's chief legal officer, who has previously said that any deal could exert an "inappropriate... influence" over the internet.

"This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the internet: openness and innovation," he said in a company blog earlier this month.

Earlier this month, Microsoft chief executive Steve Ballmer said the company would gain market share against Google in search and advertising, even if led to his "last breath" at the firm.

Decision delayed

Last week a contingent of Microsoft executives met up with their Yahoo counterparts in California.

No investments bankers attended Monday's meeting, nor was there any discussion about whether Microsoft was willing to raise its offer, according to reports.

Yahoo has been exploring different ways to fend off Microsoft since the bid was first launched six weeks ago. Possible alliances include with social networking site MySpace, web portal AOL or even Google.

Rupert Murdoch, the chief executive of News Corp, which owns MySpace, has downplayed interest in Yahoo whilst AOL has outlined plans to buy social network Bebo, making a deal more complicated..

Any deal between Google and Yahoo, could fall foul of antitrust regulations, according to analysts.

However, reports suggest that Yahoo is in no rush to make any decision.

The firm had been given a deadline of 14 March by shareholders to nominate candidates to supplant its current board. Last week, Yahoo postponed the deadline from Friday to 10 days after it announces its annual meeting.

The meeting will not be announced before April and may not be confirmed until after the firm's first quarter results are released, according to reports.

Microsoft has threatened an attempt to oust Yahoo's 10 directors if it can't broker an amicable takeover.

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