In a speech given at the Concurrences conference in Paris today, Almunia promised to take a hard line with the abuse of technology standards-related patents.

“When monopolies and tight oligopolies are allowed to occupy a market, they tend to resist change and often end up caring only about the preservation of their business models,” Almunia said. “Owners of such standards essential patents are conferred a power on the market that they cannot be allowed to misuse.”

And should they try, there will be hell to pay, because Almunia is fully prepared to use the EU’s antitrust powers to thwart them.

“I am determined to use antitrust enforcement to prevent the misuse of patent rights to the detriment of a vigorous and accessible market,” he said. “I have initiated investigations on this issue in several sectors and we will see the results in due time.”

Among those inquiries? A formal investigation into Samsung to determine whether it’s using standards-essential patents to manipulate the mobile market in Europe.

However, antitrust enforcers in the U.S. and Europe remain concerned about Google’s commitment to license key Motorola patents to competitors on fair terms, those people said, and are likely to closely monitor Google’s use of the patents. The European Commission has set a deadline of Monday to decide whether to approve the acquisition.

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The case hinges on standards-essential patents, patents which cover an area that is crucial to compliance with an industry standard, such as 3G or Wi-Fi.

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Reuters reports that the EC will likely make that decision by March. “I will receive comments from the case team towards the end of the first quarter,” said EC antitrust commissioner Joaquin Almunia. “I do not expect anything sooner. Let us see.”

Let us see, indeed. There are rumblings that the EC is compiling a Statement of Objections detailing Google’s various alleged abuses of its market dominance and could drop it in CEO Larry Page’s lap sometime this spring.

Of course, Google is facing regulatory scrutiny in the United States as well. Last week, the Federal Trade Commission said it would expand its antitrust probe of the company to include its controversial “search, plus your world” feature, which introduces social content from the company’s Google+ service into users’ search results.

At a congressional hearing, Sharis Pozen, the Justice Department’s acting antitrust chief, said: “We are also investigating the electronic book industry, along with the European Commission and the states attorneys general.”

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A press release from the European Commission doesn’t provide much detail into the probe, which will look at Apple along with Lagardère Publishing’s Hachette Livre, News Corp.’s HarperCollins, CBS’s Simon & Schuster, Pearson’s Penguin and Germany’s Verlagsgruppe Georg von Holtzbrinck (News Corp. also owns this Web site).

The EU says it will “investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition.”

It also says it will look at the “agency” pricing agreements that Apple pushed through when it introduced the iPad back in 2010. Those deals allow publishers to set the retail price of their books, and give retailers like Apple’s iTunes a set percentage of the transaction.

The previous wholesale model, championed by Amazon, allowed retailers to set the price of books. After a series of high-profile negotiations, Amazon has moved to the agency model as well; the e-commerce giant still dominates the e-book market.

A bit of background: Some of Samsung’s counterclaims against Apple are based upon patents essential to the Universal Mobile Telecommunications Standard (UMTS), patents that it has pledged to license under “Fair, Reasonable And Non-Discriminatory” (FRAND) terms. Apple has argued that this is bad business and a breach of Samsung’s FRAND commitment. Now it seems the European Commission has taken an interest in determining whether that’s true or not.

From Apple’s proposed amendment:

Samsung has launched an aggressive, worldwide campaign to enjoin Apple from allegedly practicing Samsung’s patents. Samsung has sued Apple for infringement and injunctions in no fewer than eight countries outside the United States. Indeed, Samsung’s litigation campaign and other conduct related to its Declared-Essential Patents is so egregious that the European Commission recently has opened an investigation to determine whether Samsung’s behavior violates EU competition laws.

Now, as FOSS Patents points out, the European Commission’s Directorate-General for Competition (DG COMP) has not yet officially announced the investigation to which Apple refers. But if the company feels comfortable mentioning it in legal filings, one is surely in the offing.

And that’s truly bad news for Samsung, particularly if the inquiry finds merit in Apple’s claims. If the DG COMP determines that Samsung’s behavior is anticompetitive, it can slap the company with nasty fines and remedies and potentially force it to withdraw many of its claims against Apple.

As expected, the European Commission approved Microsoft’s $8.5 billion acquisition of Skype late last week.

Next, the deal for the popular Internet communications company — which had previously been cleared by U.S. regulators — is likely to officially close later this week (paperwork!), said several sources close to the situation.

Now, of course, comes the hard part — which is whether Microsoft can successfully integrate the more nimble Skype into the belly of the software beast and allow it to thrive.

Some key questions:

How smoothly can Microsoft integrate Skype into its existing products, such as its unified communications platform, Outlook mail and Hotmail, Office, Messenger and Xbox Live? And, perhaps most of all, Windows Phone devices?

That said, will Skype also get to do what it needs for its own success beyond Microsoft? That includes working with mobile rivals Apple and Google, who now dominate the smartphone market, as well as many others. It has already managed to buy GroupMe group messaging start-up for $85 million, just months after its own acquisition in May.

And can the division — which will be led by Tony Bates, Skype’s CEO and now a Microsoft president — operate successfully located mostly away from the power center of Redmond, Wash.? Skype has a substantial office in Silicon Valley, as well as key engineering units in Estonia and Stockholm.

In that vein, will Microsoft be able to hold on to new talent like Bates and Skype’s geek squad, all of whom have substantial choices elsewhere? Like a lot of large tech companies, Microsoft is not known for being able to hold on to those who come in from the outside, in large part due to its insular culture of longtime execs.

In other words, how big a welcome will Microsoft’s other powerful presidents — such as Windows division head Steven Sinofsky — give Bates and company?

“In the area of consumer communications, the investigation found that the parties’ activities mainly overlap for video communications, where Microsoft is active through its Windows Live Messenger,” the commission said in a statement.

“However, the Commission considers that there are no competition concerns in this growing market where numerous players, including Google, are present.”

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Meted out after it was determined that Microsoft had failed to comply with a 2004 antitrust judgement that required the company to charge reasonable rates for its interoperability protocols, the $1.26 billion fine was the largest ever imposed by the EU against a single company, the first to be issued for noncompliance with a court order and, in Microsoft’s opinion, “unnecessary, unlawful and totally disproportionate.”

“This case would not have arisen if the commission had been as explicit with respect to rates which it wanted Microsoft to charge as it had been with all other terms of licensing proposed by Microsoft,” Jean-François Bellis, Microsoft’s attorney told the EU General Court. “How can the commission fine Microsoft for failing to apply reasonable rates from June 2006 to October 2007 when the final parameters were only determined on October 22, 2007?”

In other words, it’s the commission’s fault the fine was so high, because it didn’t give Microsoft the information it needed to avoid it in the first place.

Interesting argument, though it seems doubtful it will carry much weight with a court when, according to commission lawyers, Microsoft is on record claiming it understood what reasonable rates were.

Microsoft’s legal eagle Brad Smith didn’t even bother to pretend the software giant’s filing of a formal antitrust complaint against Google with the European Commission wasn’t a wee bit ironic.

Wrote Smith in a blog post late last night:

“There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step.”

But take it the company did, noting: “Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law.”

Google, no surprise, disagreed, via a statement from a spokesman.

“We’re not surprised that Microsoft has done this, since one of their subsidiaries was one of the original complainants. For our part, we continue to discuss the case with the European Commission and we’re happy to explain to anyone how our business works.”

Here is the whole Microsoft post, in which Smith outlines Microsoft reasons for its action:

Adding our Voice to Concerns about Search in Europe

30 Mar 2011 9:00 PM

Posted by Brad Smith

Senior Vice President & General Counsel, Microsoft Corporation

Microsoft is filing a formal complaint with the European Commission as part of the Commission’s ongoing investigation into whether Google has violated European competition law. We thought it important to be transparent and provide some information on what we’re doing and why.

At the outset, we should be among the first to compliment Google for its genuine innovations, of which there have been many over the past decade. As the only viable search competitor to Google in the U.S. and much of Europe, we respect their engineering prowess and competitive drive. Google has done much to advance its laudable mission to “organize the world’s information,” but we’re concerned by a broadening pattern of conduct aimed at stopping anyone else from creating a competitive alternative.

We’ve therefore decided to join a large and growing number of companies registering their concerns about the European search market. By the European Commission’s own reckoning, Google has about 95 percent of the search market in Europe. This contrasts with the United States, where Microsoft serves about a quarter of Americans’ search needs either directly through Bing or through our partnership with Yahoo!.

At Microsoft we’ve shown that we’re prepared to work hard and invest literally billions of dollars annually to offer Bing, a search service that many now regard as the most innovative available. But, hard work and innovation need a fair and competitive marketplace in which to thrive, and twice the Department of Justice has intervened to thwart Google’s unlawful conduct from impeding fair competition. In 2008 the DOJ moved to file suit against Google for its unlawful attempt to tie up and set search advertising prices at Yahoo!, causing Google to back down. And last year the DOJ formally objected to Google’s efforts to monopolize book content, a position affirmed by a federal district court in New York just last week. Unfortunately, even this has not stopped the spread by Google of new and disconcerting practices in the United States.

As troubling as the situation is in United States, it is worse in Europe. That is why our filing today focuses on a pattern of actions that Google has taken to entrench its dominance in the markets for online search and search advertising to the detriment of European consumers.

How does it do this? Google has built its business on indexing and displaying snippets of other organizations’ Web content. It understands as well as anyone that search engines depend upon the openness of the Web in order to function properly, and it’s quick to complain when others undermine this. Unfortunately, Google has engaged in a broadening pattern of walling off access to content and data that competitors need to provide search results to consumers and to attract advertisers.

On PCs it is usually not difficult for people to navigate to any search engine. Google in fact makes this point virtually every time someone raises antitrust concerns about their practices. Their defense ignores the hugely important fact that there are many other important ways that search services compete. Search engines compete to index the Web as fully as possible so they can generate good search results, they compete to gain advertisers (the source of revenue in this business), and they compete to gain distribution of their search boxes through Web sites. Consumers will not benefit from clicking to alternative sites unless all search engines have a fair opportunity to compete in each of these areas.

Our filing details many instances where Google is impeding competition in these areas. A half-dozen examples below help illustrate some of our concerns.

First, in 2006 Google acquired YouTube–and since then it has put in place a growing number of technical measures to restrict competing search engines from properly accessing it for their search results. Without proper access to YouTube, Bing and other search engines cannot stand with Google on an equal footing in returning search results with links to YouTube videos and that, of course, drives more users away from competitors and to Google.

Second, in 2010 and again more recently, Google blocked Microsoft’s new Windows Phones from operating properly with YouTube. Google has enabled its own Android phones to access YouTube so that users can search for video categories, find favorites, see ratings, and so forth in the rich user interfaces offered by those phones. It’s done the same thing for the iPhones offered by Apple, which doesn’t offer a competing search service.

Unfortunately, Google has refused to allow Microsoft’s new Windows Phones to access this YouTube metadata in the same way that Android phones and iPhones do. As a result, Microsoft’s YouTube “app” on Windows Phones is basically just a browser displaying YouTube’s mobile Web site, without the rich functionality offered on competing phones. Microsoft is ready to release a high quality YouTube app for Windows Phone. We just need permission to access YouTube in the way that other phones already do, permission Google has refused to provide.

Third, Google is seeking to block access to content owned by book publishers. This was underscored in federal court in New York last week, in the decision involving Google’s effort to obtain exclusive and unfettered access to the large volume of so-called “orphan books–books for which no copyright holder can readily be found. Under Google’s plan only its search engine would be able to return search results from these books. As the federal court said in rejecting this plan, “Google’s ability to deny competitors the ability to search orphan books would further entrench Google’s market power in the online search market.” This is an important initial step under U.S. law, but it needs to be reinforced by similar positions in Europe and the rest of the world.

Fourth, Google is even restricting its customers’–namely, advertisers’–access to their own data. Advertisers input large amounts of data into Google’s ad servers in the course of managing their advertising campaigns. This data belongs to the advertisers: it reflects their decisions about their own business. But Google contractually prohibits advertisers from using their data in an interoperable way with other search advertising platforms, such as Microsoft’s adCenter.

This makes it much more costly for Google’s advertisers to run portions of their campaigns with any competitor, and thus less likely that they will do so. That is a significant problem because most advertisers figure that they have to advertise first with Google. If it’s too expensive to port their advertising campaign data to competing advertising platforms, many won’t do it. Competing search engines are left with less relevant ads, and less revenue. And while this restraint isn’t visible to consumers, its effects are nonetheless felt across the Web. Advertising revenue is the economic propellant fueling the billions of dollars needed for ongoing search investments. By reducing competitors’ ability to attract advertising revenue, this restriction strikes at the heart of a competitive market.

Fifth, this undermining of competition is reflected in concerns that go beyond Google’s control over content. One of the ways that search engines attract users is through distribution of search boxes through Web sites. Unfortunately, Google contractually blocks leading Web sites in Europe from distributing competing search boxes. It is obviously difficult for competing search engines to gain users when nearly every search box is powered by Google. Google’s exclusivity terms have even blocked Microsoft from distributing its Windows Live services, such as email and online document storage, through European telecommunications companies because these services are monetized through Bing search boxes.

Finally, we share the concerns expressed by many others that Google discriminates against would-be competitors by making it more costly for them to attain prominent placement for their advertisements. Microsoft has provided the Commission with a considerable body of expert analysis concerning how search engine algorithms work and the competitive significance of promoting or demoting various advertisements.

Over the past year, a growing number of advertisers, publishers, and consumers have expressed to us their concerns about the search market in Europe. They’ve urged us to share our knowledge of the search market with competition officials. As they’ve pointed out, the stakes are high for the European economy. On any given day, more than half of all Europeans use the Internet, and more than 90 percent of them look for information about goods and services on the Web. Indeed, the European Commission’s Digital Agenda made clear that commerce is moving online, where two-thirds of Europeans begin their shopping process. It’s therefore critical that search engines and online advertising move forward in an open, fair and competitive manner.

There of course will be some who will point out the irony in today’s filing. Having spent more than a decade wearing the shoe on the other foot with the European Commission, the filing of a formal antitrust complaint is not something we take lightly. This is the first time Microsoft Corporation has ever taken this step. More so than most, we recognize the importance of ensuring that competition laws remain balanced and that technology innovation moves forward.

We readily appreciate that Google should continue to have the freedom to innovate. But it shouldn’t be permitted to pursue practices that restrict others from innovating and offering competitive alternatives. That’s what it’s doing now. And that’s what we hope European officials will assess and ultimately decide to stop.

Please see this disclosure related to me and Google.

The Justice Department and Federal Trade Commission’s interest in Apple’s new subscription service is at a preliminary stage, and might not develop into either a formal investigation or any action against the company. But it comes as Apple has attracted growing antitrust scrutiny in the U.S. and Europe.

A spokeswoman for the European Commission, the European Union’s executive arm, said Thursday that the commission was aware of the new subscription service and was “carefully monitoring the situation.”

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Or wanted it–at least not the kind that Schmidt’s been offering recently, which was on display once again today in yet another PR gaffe.

Asked by the Sunday Telegraph about the European Commission inquiry into the company’s dominance in search, Schmidt spun the requests for information that Google received as part of that investigation as the beginnings of possible settlement discussions.

“I think it is in our interests and I would hope in their interests to do a quick analysis of concerns that have been raised by competitors, hopefully they are minor or they are not correct, and we’ll find out and make sure we are operating well within the law and the spirit of the law,” he said. “We understand we play a major role in Europe and we’re not denying that. We have a lot of meetings with appropriate government officials.”

We have a lot of meetings with appropriate government officials.

If that’s true, the officials to which Schmidt refers have nothing to do with the European inquiry into Google’s business practices. Because the European Commission today flat-out denied it is in antitrust resolution talks with the company. “There are no discussions,” commission spokeswoman Amelia Torres said in a statement. “The investigation is not finished.”

We have a lot of meetings with appropriate government officials. One more to add to Schmidt’s dubious canon.

Yep, Google.

Turns out that in France, 90 percent of Internet searches are conducted via Google. And while that might be concerning from a competitive standpoint, it doesn’t constitute a breach of law and Google is in no danger of sanctions. Right now, anyway.

“This dominant position is not reprehensible: it results from a great deal of innovation, supported by significant and continuous investments,” Autorite de la Concurrence concluded. “Only the abusive exercise of such market power could be sanctioned.”

That said, the agency’s findings will undoubtedly invite further scrutiny of Google abroad. Certainly, it adds a bit more heat to the European Commission’s investigation into allegations that Google abuses its dominant position in search.

Google, for its part, argues that just because it’s dominant in search doesn’t mean search and search advertising isn’t competitive.

“Search ads are one of many options for advertisers,” the company said in a statement. “If the price of search ads rises, advertisers can and do switch to other formats, both online and offline. That is the sign of a competitive and dynamic industry.”

The commission received complaints from other Internet search providers that Google abused its dominant market position by allegedly placing their services lower in results rankings, while Google’s own services were given preferential placing.

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“We understand that matters are at a very preliminary stage and we are currently reviewing the allegations,” Qualcomm said in a statement.

The commission, Europe’s highest antitrust authority, said they had received a complaint against Qualcomm, but that the investigation was more of a “fact-finding exercise at this stage.”

The probe is based on a complaint from U.K. wireless chip maker Icera, which mainly manufactures chip sets for mobile-broadband devices, such as dongles. “We can confirm that Icera has lodged a complaint with the European Commission, alleging that Qualcomm has engaged in anticompetitive activity,” Qualcomm said.

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The electronics giant, which recently posted upbeat earnings and forecasts, was one of several chip makers slapped with steep fines by the European Commission for price fixing.

It faces the heaviest fine–145.7 million euros (US$182 million)–while rival Micron Technology (MU) got off the hook by cooperating with authorities in the investigation.

Along with Samsung, eight other chip makers, including Germany’s Infineon Technologies, South Korea’s Hynix Semiconductor, Taiwan’s Nanya Technology, and Japan’s Elpida Memory and Toshiba, were fined a combined 330 million euros. The chip makers and analysts say it’s no big deal.

That’s because the market for dynamic random access memory, or DRAM, is booming as replacement demand from consumers and corporations for PCs is picking up. Capital spending over the past two years remained weak, curtailing global supply. Chip prices have held firm so far this year, enabling the likes of Samsung and Micron to post strong profits so far.

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With its admission last week that its Street View cars unwittingly captured data sent over unsecured wireless Wi-Fi networks, Google (GOOG) appears to have run afoul of regulators on both sides of the Atlantic.

Sources familiar with the matter tell the Financial Times that the Federal Trade Commission is considering an inquiry into the matter, and the panel of European privacy regulators that advises the European Commission is calling for a full investigation to determine exactly what information was collected and whether the manner of its collection was a violation of privacy law.

The Europeans seem particularly miffed over the cock-up and Google’s explanation for it, which they find a bit suspect. Over the weekend, Peter Schaar, Germany’s federal commissioner for data protection and freedom of information, fired off a caustic blog post questioning the credibility of the company’s claim that personal data were collected accidentally.

“So everything was a simple oversight, a software error!” Schaar wrote. “The data was collected and stored against the will of the project’s managers and other managers at Google. If we follow this logic further, this means: The software was installed and used without being properly tested beforehand. Billions of bits of data were mistakenly collected, without anyone in Google noticing it, including Google’s own internal data protection managers, who two weeks ago were defending to us the company’s internal data protection practices.”

Have to admit, he does have a point. How does a company with Google’s smarts and technological acumen collect and store Wi-Fi network payload data in more than 30 countries for three years without being aware of it?

Mistakes are made, I suppose. But the breadth of this one is pretty incredible. As Marc Rotenberg, executive director of the Electronic Privacy Information Center, told the Financial Times, “This may be one of the most massive surveillance incidents by a private corporation that has ever occurred. It is unprecedented vacuuming of WiFi data by a private company. Can you imagine what would happen if a German corporation was sending cars through Washington sucking up all this information?”

Yes, but to err is human…

The merger of France Telecom’s Orange and Deutsche Telekom-owned T-Mobile will create the largest mobile phone operator in the U.K. with about a 34 percent share of the market, just ahead of current market leader O2, which claims about 28 percent. It will also reduce the number of carriers in the country, which critics argue will reduce competition and raise prices.

Orange and T-Mobile disagree, of course, and claim the deal will give subscribers better coverage and improved customer service. We’ll see, I guess.

Oh, no word yet on the combined company’s name.

“This week came news that the European Commission is investigating various aspects of Google’s conduct, including claims of retaliation, exclusivity and manipulation of search results to disadvantage rivals,” Heiner wrote. “Google’s public response to this growing regulatory concern has been to point elsewhere–at Microsoft. Google is telling reporters that antitrust concerns about search are not real because some of the complaints come from one of its last remaining search competitors….[But] ultimately what’s important is not who is complaining, but whether or not the challenged practices are anticompetitive.”

A great point, and one that makes Google’s inflammatory out-of-the-gate finger-pointing earlier this week seem a bit hysterical. And if Microsoft’s European properties did spur the EC’s preliminary investigation into Google, so what? As Heiner wryly notes, “Complaints in competition law cases usually come from competitors”–“dumbass” here is, presumably, implied.

So does Microsoft (MSFT) feel Google (GOOG) is worthy of antitrust scrutiny? Well, what do you think?

“Both search and online advertising are increasingly controlled by a single firm, Google,” Heiner wrote. “…Microsoft would obviously be among the first to say that leading firms should not be punished for their success. Nor should firms be punished just because a particular business practice may harm a rival–competition on the merits can do that, too. That is a position that Microsoft has long espoused, and we’re sticking to it. Our concerns relate only to Google practices that tend to lock in business partners and content (like Google Books) and exclude competitors, thereby undermining competition more broadly. Ultimately the competition law agencies will have to decide whether or not Google’s practices should be seen as illegal.”

Well, there you go. Obviously, the gloves are coming off here. Too bad for Google that it doesn’t take a punch very well.

The European Commission has opened an investigation into Google’s dominance of the search and search advertising markets in Europe at the behest of three complainants: French legal search engine ejustice.fr, U.K. price-comparison venture Foundem, and Ciao!, a product review and price-comparison site.

Perhaps unsurprisingly, the latter two have ties to Microsoft. Ciao is a subsidiary of Google’s Redmond rival and Foundem is a member of Microsoft-funded organization ICOMP.

In any event, the three companies have all accused Google (GOOG) of undermining their business in some way, either by unfairly demoting their rankings in its search results or by saddling them with onerous terms and conditions. And the European Commission has taken their complaints seriously enough to look into them.

The inquiry is at an “early, fact-finding stage” and may not result in further action, but it has clearly got Google worried. It was the EC, after all, that ultimately beat Microsoft (MSFT) into submission, forcing the company to alter its business practices.

In a post to Google’s Public Policy Blog entitled “Committed to Competing Fairly,” Julia Holtz, the company’s senior competition counsel, denied the charges against Google, saying the company has done nothing wrong.

“Though each case raises slightly different issues, the question they ultimately pose is whether Google is doing anything to choke off competition or hurt our users and partners,” she wrote. “This is not the case. We always try to listen carefully if someone has a real concern and we work hard to put our users’ interests first and to compete fair and square in the market.”

And so, beginning on Feb. 22, Windows users in the U.K., France and Belgium will be presented with a ballot screen offering them an opportunity to swap out Internet Explorer for one of 11 other browsers from rivals like Mozilla, Apple (AAPL), Opera and Google (GOOG).

“The browser choice screen software update will be offered as an automatic download through Windows Update for Windows XP, Windows Vista and Windows 7,” Microsoft (MSFT) Vice President and Deputy General Counsel Dave Heiner explained in a blog post announcing the move. “The software update will be installed automatically, or will prompt you to download or install it, depending on which operating system you are running and your settings for Windows Update.”

Once that’s done, users will be shown a ballot screen offering the option of installing one of the listed browsers, learning more about them or postponing the browser choice to a later time. Simple enough–assuming that automatic updates is enabled and that they actually care about browser choice.

If that’s the case, many probably dumped IE for an alternative long ago, right?

Anyway, as I said, a limited ballot screen rollout begins next week with full-scale deployment across the rest of Europe a week later, potentially reaching some 170 million PCs. It will be interesting to see how many of them end up switching to a new default browser.

PREVIOUSLY:

• Microsoft Announces Windows 7 Neelie Kroes Edition
• Brussels Palace of Justice Apparently Has Only Single Courtroom
• Great Move, EC. Now We Have to Download IE Ourselves…
• If Windows Didn’t Ship With IE, How Would You Download Firefox?
• Microsoft’s Browser Move to Make Windows Even More Annoying
• European Commission Announces Microsoft Antitrust Fine Ultimate Edition™

Implementation of the deal, which will see Microsoft’s Bing powering Yahoo searches and Yahoo handling sales of search ads for both companies, is “expected to begin in the coming days.” The companies have set a goal of completing it in the U.S. by the end of 2010.

It is worth noting that while Yahoo (YHOO) is transitioning its algorithmic and paid search platforms to Microsoft (MSFT), the search user experience is still its responsibility. In other words, this deal is no quick panacea, and Yahoo must remain on point and innovating if it is to make the most of the alliance.

Anyway, approval of the deal in the U.S. and abroad was clearly a relief to both companies, and Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer applauded it in dueling banjo remarks.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” Bartz said. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Ballmer was equally enthusiastic. “Although we are just at the beginning of this process, we have reached an exciting milestone,” he said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Yahoo! and Microsoft to Implement Search Alliance
Completion of U.S., European Review Clears Way for Agreement to Move Forward

SUNNYVALE, Calif. & REDMOND, Wash., Feb 18, 2010 — Microsoft and Yahoo! announced today that they have received clearance for their search agreement, without restrictions, from both the U.S. Department of Justice and the European Commission, and will now turn their attention to beginning the process of implementing the deal.

Implementation of the deal is expected to begin in the coming days and will involve transitioning Yahoo!’s algorithmic and paid search platforms to Microsoft, with Yahoo! becoming the exclusive relationship sales force for both companies’ premium search advertisers globally. Once the transition is completed, the companies’ unified search marketplace will deliver improved innovation for consumers, better volume and efficiency for advertisers and better monetization opportunities for web publishers through a platform that contains a larger pool of search queries.

“This breakthrough search alliance means Yahoo! can focus even more on our own innovative search experience,” said Yahoo! Chief Executive Officer Carol Bartz. “Yahoo! gets to do what we do best: combine our science and technology with compelling content to build personally relevant online experiences for our users and customers.”

Microsoft CEO Steve Ballmer concurred with Bartz’s assessment. “Although we are just at the beginning of this process, we have reached an exciting milestone,” Ballmer said. “I believe that together, Microsoft and Yahoo! will promote more choice, better value and greater innovation to our customers as well as to advertisers and publishers.”

Consumer Search Experience

Under terms of the agreement, which was announced in late July 2009, Microsoft will provide Yahoo! with the same search result listings available through Bing, and Yahoo! will innovate around those listings by integrating rich Yahoo! content, enhanced listings with conveniently organized information about key topics, and tools to tailor the experience for Yahoo! users.

Yahoo! will focus on providing a compelling and innovative search experience that allows people to find and explore the things, people and sites that matter most to them. While Microsoft will provide the underlying platform, both companies will continue to create different, compelling and evolving experiences, competing for audience, engagement and clicks.

Transition Timeline

Yahoo! and Microsoft will work with advertisers, publishers and developers on a customized plan designed to make the transition as efficient and seamless as possible. Both companies will begin working closely with most partners well in advance of their planned transition to the Microsoft platform and will communicate important information to partners about the transition periodically via phone, email, webinars and a newly created website at www.searchalliance.com.

The companies will begin the transition of algorithmic search and have set a goal of completing that effort in at least the United States by the end of 2010. The companies also hope to make significant progress transitioning U.S. advertisers and publishers prior to the 2010 holiday season, but may wait until 2011 if they determine that the transition will be more effective after the holiday season. All global customers and partners are expected to be transitioned by early 2012.

Customer Relationships

Once the transition is in place, Yahoo! and Microsoft will each represent and provide customer support to different advertiser segments. Yahoo!’s sales team will exclusively represent and support high volume advertisers, SEO and SEM agencies, and resellers and their clients. Microsoft will represent and support self-service advertisers.

Regulatory Summary

Although the transaction previously was cleared by regulators in Australia, Brazil and Canada, the terms of the agreement required clearance by U.S. and European regulators before it could commence. Meanwhile, Microsoft and Yahoo! continue to work with regulators in Korea, Taiwan, and Japan to ensure that they have all relevant information necessary to evaluate the transaction before the deal commences in those specific jurisdictions.