Silicon valley wars

Last Updated: Saturday 04 July 2015

-- Google has thrown a lifebelt to its floundering rival Yahoo! by proposing a partnership between the two Internet search rivals as a way to escape Microsoft's us $44.6 billion takeover bid. Google's chief executive Eric Schmidt telephoned Yahoo!'s founder, Jerry Yang, to propose working together. The message was leaked to the us media.

A tie-up could involve Yahoo! outsourcing its search and advertizing functions to Google and concentrating on other areas where it has technological strength including mobile applications, social networking and content sharing. The move would amount to an admission by Yahoo! that it has lost the battle for online search to Google. But it would allow the company to keep its independence and to maintain its own quirky corporate culture which, employees fear, could be lost if Yahoo! is swallowed by Microsoft.

Yahoo! has not publicly responded to Google's approach. The intervention by Google heightens tension in Silicon Valley. Microsoft's chief executive, Steve Ballmer, sounded a confident note on the prospects of his company taking over Yahoo!. "We think we have made a generous offer. We trust the Yahoo! board and Yahoo! shareholders will join with us quickly in moving down an integrated path," he said.

Ballmer rejected suggestions that a combination could be anti-competitive, saying that the creation of a more powerful "number two" to Google in the Internet world would be good for consumers.

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