Yahoo's big lie in the Microsoft takeover bid

Yahoo is planning to rush headlong into Google's embrace as a way to avoid a takeover by Microsoft, and claims a Google deal would not violate antitrust laws. But the day before Microsoft made its takeover offer, Yahoo had said a deal with Google might violate antitrust laws. Is truth not part of Yahoo's corporate DNA?

Reuters reports that according to just-released court documents, Yahoo executives "dismissed a search-advertising deal with Google due to antitrust concerns, one day before Microsoft Corp made its takeover offer earlier this year."

The document in question was prepared by Yahoo execs on January 30, to prepare for a meeting with Yahoo employees. The document was a kind of cheat sheet for the execs, so they could be prepared to answer questions employees asked them.

If an employee asked whether Yahoo would "consider outsourcing search to Google," the document recommended that Yahoo execs first say that "We are focused on long-term value creation rather than short-term gains," and then to say that such a deal:

...may not take into account the longer-term impact on the competitive market if search becomes an effective monopoly.

In other words, the deal could violate antitrust laws.

Despite that, on April 9, Yahoo announced it was going to test a deal with Google in which Google would sell Yahoo's search ads --- the very thing that Yahoo previously had said would violate antitrust laws.

Yahoo now says the deal won't violate antitrust laws, and doesn't offer any explanation for its about face.

The document was released as part of a suit against Yahoo by Michigan pension funds, which wants to force Yahoo to begin talks again with Microsoft. Some other unpleasant facts have also come to light as a result of the suit, notably that Yahoo boosted severance packages for its employees by a whopping $462 million, as a way to make the takeover bid too expensive for Microsoft.

Expect other ugly facts to come to light as well. Whenever you start turning over corporate rocks, slimy things tend to escape.

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