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Yahoo-Microsoft Regulatory Filings Start This Week: Let the Legal Game-Playing Begin!

Kara Swisher — Tue, 04 Aug 2009 10:01:32 +0000

After all the investor hubbub over the oh-no-they-didn’t deal between Yahoo and Microsoft starts to die down a bit, the pair are now embarking on the path that is the only way toward proving the efficacy of them joining together.

That would be getting a variety of state, federal and international regulators to say yes to the wide-ranging online advertising and search arrangement they announced last week so they can start making it work.

According to sources at both companies, a variety of filings will be made this week, including one to the Securities and Exchange Commission that should provide more details of the partnership.

When it was unveiled last Wednesday, the companies said Microsoft (MSFT) will run search technology for the two, while Yahoo (YHOO) will sell the premium search advertising.

That SEC filing could answer a number of questions some still have about the deal, such as whether there is a large break-up fee that Microsoft would pay Yahoo in case the deal is scuttled.

That’s just the outcome that Microsoft and Yahoo are trying to avoid.

“We think of it as an outreach effort to explain how we are creating a strong No. 2 to Google,” said one source close to the situation. “The main goal will be to show that a better competitor in the marketplace is a good thing.”

While the companies are prepping for opposition from Google (GOOG), sources close to the thinking at the dominant search company said it is more likely to be muted and indirect.

That’s especially true since a MicroHoo makes Google–currently under a lot more government scrutiny than ever before–look like less of a bully.

Thus, Google’s tactics would entail less direct statements and more pointing out the discrepancies between what Microsoft said when Google tried to get approval for a search deal with Yahoo last year and what it argues now.

“They will probably not be that obvious, but they will be there still,” said Microsoft CEO Steve Ballmer to me, in an off-hand remark at the software giant’s Financial Analyst Meeting last week.

It’s a game of legal chicken that Ballmer knows well.

Already, for example, Microsoft and Yahoo execs have been aggressively reaching out to major publishers and advertisers to get their staunch support.

That included calls immediately after the deal was announced last Wednesday to such execs as Martin Sorrell of the WPP Group (WPPGY) and Jeff Zucker, CEO of NBC Universal, a unit of GE (GE).

In Washington, D.C., both companies have legions of lawyers to try to make sure the Justice Department, which will review the case due to its antitrust implications, has all the information it might need.

And, more to the point, they want to avoid the debacle that took place when Yahoo and Google tried to get approval for their failed deal last year.

That deal was ended by Google after it became clear that Justice was going to fight it by arguing that top search companies hooking up hurt competition and stifled innovation.

In addition, there might be Congressional scrutiny, with possible hearings, similar to those held when the Yahoogle deal was pending, such as in the Senate Judiciary Antitrust Subcommittee.

And, of course, there are actually independent groups concerned and they have also been in contact with regulators.

“There are questions that must be answered regarding the collection and sharing of consumer data by the two companies,” said Jeff Chester, executive director of the Center for Digital Democracy, a D.C.-based group that works to promote consumer privacy and protection online, in a statement last week. “While the rationale for the deal is to provide some much needed competition to Google (and income for Yahoo), the further consolidation of the global digital advertising system should be a concern to Internet users, privacy advocates, online marketers, and competition regulators.”

Sources said Microsoft and Yahoo also plan to petition regulators in the European Union this week, which is likely to be most concerned about privacy issues involved in their union.

They will also be doing the same in other key countries worldwide, such as Korea, Taiwan and Brazil.

And, finally, given how involved state attorneys general became in beaching the Yahoo deal to partner with Google, they also will be starting outreach to key states, such as California, where Silicon Valley-based Yahoo is headquartered.

“Once again, it will be the Lawyer Employment Act of 2009,” joked one person close to the deal. “At least, that shows there is some economic benefit to this deal already.”

While we all wait in breathless regulatory anticipation, here are interviews I did at last year’s Senate hearings on Yahoogle, with lawyers from Google (David Drummond), Microsoft (Brad Smith) and Yahoo (Mike Callahan).

Incredibly, they are the very same lawyers who will be pretzeling themselves in entirely different shapes than they pretzeled themselves a year ago.

I would expect nothing less!

Here’s the video:

[ See post to watch video ]

Welcome to the FCC, Julius: Now Get to Work on a National Broadband Plan, Please…

Kara Swisher — Mon, 29 Jun 2009 20:04:21 +0000

Last week, after much delay, longtime Internet exec Julius Genachowski (pictured here) was confirmed by the Senate as the chairman of the Federal Communications Commission.

It is an important role for the future development of the Web, of course, although it took a dog’s age into the new Democratic administration to approve him.

Hopefully, he and the other commissioners can soon get to work on a wide range of major digital issues, such as a national broadband plan that does not cost Americans a fortune.

Genachowski, a close tech adviser to President Barack Obama, was seated along with Commissioner Robert McDowell, a Republican appointee who was confirmed for a second FCC term.

After the Senate approves two others–Democrat Mignon Clyburn and Meredith Attwell Baker for the GOP–in the next month, it will round out the five-member panel.

(The other FCC commissioner is a Dem, Michael Copps, who has been acting chairman while Genachowski got approval.)

Genachowski, a former FCC staffer, was most recently working as a VC at Rock Creek Ventures and LaunchBox Digital. But he is best known to many in Silicon Valley as a top exec at IAC/InterActiveCorp. (IACI).

He is likely to make his debut to chair his first meeting this coming Thursday, and it is a humdinger of dull:

According to the FCC’s Web site, the July open meeting, held in Washington, D.C., will consider three items:

1.) Amendment of the Commission’s Rules to Provide Spectrum for the Operation of Medical Body Area Networks: The Commission will consider a Notice of Proposed Rulemaking to allocate spectrum and establish service and technical rules for the operation of Medical Body Area Networks to monitor patients’ physiological data.

2.) Amendment of Service and Eligibility Rules for FM Broadcast Stations: The Commission will consider a Report and Order concerning changes in the FM translator rules to allow AM broadcast stations to rebroadcast their signals on eligible FM translator stations.

3.) Amendment of Part 101 of the Commission’s Rules to Accommodate 30 Megahertz Channels in the 6525-6875 MHz Band: The Commission will consider a Notice of Proposed Rulemaking addressing whether to provide licensees with authority to operate on channels with bandwidths up to 30 megahertz in the Upper 6 GHz band and whether to extend conditional authority to two additional channel pairs in the 23 GHz band, as well as an Order addressing a related waiver reques.

But the site also mentioned that “the Meeting also will include a presentation on the status of the Commission’s process for developing a National Broadband Plan.”

Now, that is something BoomTown would like to know about since this country is effectively still in the dirt-road period, in terms of high-speed broadband access for Americans.

But, of course, the cost of what we do get–which is very substandard compared to a lot of other countries–is also very pricey.

Let’s hope Genachowski–who has a lot of other issues on his plate, especially as the media industry undergoes drastic reconfiguration too–can do something about it.

In a related note, Lawrence Strickling was also OK’d to run the telecom division of the Commerce Department, which is the agency with the dough ($4.7 billion in government funds) to help the create this supposed Internet infrastructure boom with the FCC.

I remain dubious of any movement in the arena, but still hopeful.

And, until there is some action from Genachowski, here is a highlights video from an onstage interview Walt Mossberg and I did with former FCC chairman Kevin Martin–along with Verizon (VZ) Wireless CEO Lowell McAdam–at the sixth D: All Things Digital conference in 2008.

Here is the D6 video:

[ See post to watch video ]

Yahooglesoft Lawyers Speak!

Kara Swisher — Wed, 16 Jul 2008 12:59:39 +0000

Please see this disclosure related to me and Google.

Yesterday, BoomTown went to Washington, D.C. to see lawyers from Microsoft (MSFT), Yahoo and Google face off in Senate hearings about the controversial search advertising outsourcing deal recently struck between Yahoo (YHOO) and Google (GOOG).

Titled “The Google-Yahoo Agreement and the Future of Internet Advertising,” the hearings were called by the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights and chaired by Sen. Herb Kohl (D., Wis.).

As I expected, the hearings on the Yahoo agreement with Google (transcripts of testimonies here) to outsource some of its ad search business were a lot of show and not so much content.

There was also a hearing for the House’s Task Force on Competition Policy and Antitrust Laws, called “Competition on the Internet,” which featured the same trio of execs.

And here’s a video of BoomTown chatting up Google’s Chief Legal Officer David Drummond, Microsoft’s General Counsel Brad Smith and Michael Callahan, general counsel for Yahoo, right after the Senate hearings were over.

[ See post to watch video ]

Please see this disclosure related to me and Google.

Kara Visits the Senate Hearings on the Yahoo-Google Ad Search Deal

Kara Swisher — Tue, 15 Jul 2008 16:21:06 +0000

Please see this disclosure related to me and Google.

Sitting at the Senate hearings about the Yahoo-Google ad search deal this morning in Washington, D.C., let it be said that BoomTown is deeply dubious about whether it is a good thing for consumers and advertisers, as both Internet companies have asserted.

But this was my most certain conclusion:

The worst-case scenario is actually for politicians to meddle in the Internet space with their largely Web-ignorant mitts.

But that’s just me!

In any case and as usual, the hearings on the Yahoo agreement with Google (transcripts of testimonies here) to outsource some of its ad search business were a lot of show and not so much content.

There was an interesting little testy back-and-forth between Sen. Arlen Specter (R., Pa.) over remarks that Yahoo (YHOO) CEO Jerry Yang might have made in a previous meeting with Microsoft (MSFT) that was recounted by Microsoft General Counsel Brad Smith.

The gist of it was that Yang sketched out a world of two “poles”–Google (GOOG) on one side and Microsoft and Yahoo on the other. And if Yahoo moved over to the Google side, the World Wide Web would be terribly askew!

Yahoo General Counsel Michael Callahan said that was not his recollection of the meeting, in which he also participated.

Specter wondered who was telling the truth, which only made me want to yell out: Welcome to the MicroHoo Hall of Crazy Mirrors, Senator!

Mostly, Google and Yahoo argued that by doing an ad-search partnership they would stay aggressively competitive with each other.

Microsoft, of course, argued that the end was nigh.

“Never before in the history of advertising has one company been in the position to control prices on up to 90 percent of advertising in a single medium,” said Microsoft’s Smith. “Not in television, not in radio, not in publishing. It should not happen on the Internet.”

Countered Yahoo’s Callahan: “The purpose of this commercial arrangement, the intent of Yahoo moving forward, is to make our company an even stronger competitor to Google, to Microsoft and to others in the dynamic and rapidly growing online advertising world.”

Of course, Google chimed in, via Google Chief Legal Officer David Drummond: “Google and Yahoo will remain vigorous competitors, and that competition will help fuel innovation that is good for users and the economy.”

Yes, concentration of power is always good for the world! I mean, Microsoft’s Windows monopoly turned out so well for the industry for so long!

Wait, that’s not a very political thing to say. (Then again, I completely forgot just how stuffy D.C. was and wore Silicon Valley garb–jeans and a T-shirt–to the hearing.)

In any case, the sideshow to the MicroHoo drama moves to the House side of Capitol Hill this afternoon.

There the Task Force on Competition Policy and Antitrust Laws held the less dramatically named hearing “Competition on the Internet.”

It was the same trio of Yahoo, Microsoft and Google lawyers, of course, and more of the same.

Which is to say–a lot of hot air, little movement, but much more evidence of the next phase of the Internet and the two true poles: The Web World War of Microsoft versus Google.

In any case and speaking of hot air, here’s my video interview with the lawyers from Google, Yahoo and Microsoft, which is also posted here:

[ See post to watch video ]