Friday's announcement that Microsoft wants to buy Yahoo for $44.6 billion not only riled privacy and antitrust watchdogs but it also excited analysts. Jessica Zufolo, a senior telecom analyst at Medley Investment Group, said the proposal "raises a lot of complications" if Yahoo takes the bait.
The combination would likely "stir a lot of unrest on Capitol Hill and in the consumer services community about the kinds of antitrust concerns that increased consolidation would mean" -- especially in the search market, which is dominated by Google, she said.
Time Warner, which owns America Online, as well as other competitors may oppose the merger at the FTC, Justice Department and in Congress, Zufolo said. There is little doubt that regulators and antitrust officials "will take a very slow, careful review" if Yahoo accepts Microsoft's offer.
Google's merger with online ad firm DoubleClick "was a large transaction and it indeed cleared the way for other transactions," she said. Yahoo's partnership with AT&T and Microsoft's filings at the FCC may also raise questions. "It opens up a Pandora's Box of federal regulatory review -- not to mention possible [interest from] state attorneys general.
A Google spokesman said "it would be premature to comment at this point" and an AOL official declined to comment.
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