If Microsoft buys Yahoo, what does it mean for Europe?

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As you will no doubt have heard Microsoft has today offered to buy Yahoo! for $44.6 billion to create a “more efficient” company with total annual synergies of $1 billion. Microsoft says it has a plan to integrate employees and “retain” key Yahoo engineers and the top people. But the regulatory implications don’t end at the SEC. The European Commission is already mounting an antitrust investigation into the tech giant over its .Net framework, Office Open XML (OOXML) document format and various server products. The European Commission has also officially started its antitrust investigation into Microsoft’s tying of Internet Explorer to Windows.

The Yahoo buyout would – in addition – attract a different kind of regulatory interest, based on the media implication of the Redmond giant owning two major portals, MSN and Yahoo, in the various EU countries. However, since Google’s search engine dominates in the UK on market share, a Microsoft/Yahoo combination is likely to be welcomed as a more robust competitor, at least in the UK.

As for the merging of the Microsoft and Yahoo workforce, both have significant marketing sales operations and engineering operatiosn in Europe. Microsoft has a big facility just outside of London with plenty of engineers, an R&D facility. Yahoo’s European operation has a mix of sales and engineering across Europe.

UPDATE 12.30pm: (corrected) Microsoft have around 1200 permanent Irish staff, 500 contractors and Yahoo has around 600 permanent staff in Ireland. In the UK Microsoft has around 2,000 employees and countless contractors. Prior to this new Yahoo was planning to cut 1,500-2,500 post globally, but no specific figures were announced for its Yahoo! UK & Ireland operations.

UPDATE 1pm: Yahoo’s UK press office told me “We are not making any comment on anything at this time.”

UPDATE 1.10pm: Yahoo owns Kelkoo, a shopping price comparison engine, which spans Europe. MSN runs its own shopping comparison service. Since Kelkoo sits outside the Yahoo brand, it’s likely Kelkoo would be shut down and its commercial relationships passed to MSN.

UPDATE 1.37pm: Google’s press office: “No comment.”

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