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Justice Dept. Should Leave the Microsoft-Yahoo Search Deal Alone

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Justice Dept. Should Leave the Microsoft-Yahoo Search Deal Alone

Statements of Ryan Young and Wayne Crews

Washington,
D.C., July 29, 2009—Today, Microsoft and Yahoo announced a ten-year partnership
of their search businesses in order to better compete against Google. The
Department of Justice, citing antitrust concerns, is likely to investigate the
deal before allowing it to go through. Competitive Enterprise Institute technology
policy experts Wayne Crews and Ryan Young
argue that regulators can best serve consumer interests by leaving well enough
alone. 

Ryan Young, Fellow in Regulatory Studies: 

“What is there to investigate?
Microsoft and Yahoo are trying to outcompete Google. To succeed, they will need
to put together the best search engine they can. The firms believe their
announced partnership will help them achieve that goal. They should be allowed
to try – their own money is at stake if they fail. Either way, Internet users stand
to benefit. Bing and Yahoo Search should improve from the proposed partnership,
which will also force Google to make its own search engine better, lest it be
left behind. This is how a competitive, contestable market works. The goal of
antitrust policy is to benefit consumer welfare, but there is nothing
regulators can do to make an already fiercely competitive market even more so.” 

Wayne Crews, Vice President for Policy and Director of Technology Studies: 

“This administration is already suspicious
of allegedly ‘dominant’ firms in the high tech sector – but consumers are
better off when regulators let markets evolve naturally, rather than guiding them
from above. The Microsoft-Yahoo alliance has the potential to offer great
value to consumers. The dangers of arbitrarily blocking such voluntary business
arrangements, or needlessly delaying them, are severe. Regulatory
intervention in the high-tech sector thwarts the natural evolution of the
market. Worse, it distorts the
response of competitors. Antitrust investigations steer the market
in unnatural directions, creating instabilities in entire industry sectors. 

“Consumers have more to fear from
government bureaucracies that have the power to stop progress cold than they do
from free enterprise looking to create the next big thing. Should the
Microsoft-Yahoo partnership not pan out, rivals, partners, consumers,
investors, advertisers, and even global competitors are perfectly capable of
dealing with any challenges to competition. Consumers stand to lose if Washington gets involved.” 

CEI is a non-profit, non-partisan
public interest group that studies the intersection of regulation, risk, and
markets.  For more information about CEI,
please visit our website at www.cei.org.