Wouldn't a Microsoft - Yahoo merger violate antitrust laws?

Going by a measurement used by the FTC and others, called HHI, the search engine market is considered "highly concentrated". Futher, the Microsoft-Yahoo merger further concentrates this market drastically. In highly concentrated markets, and HHI increase of 50 is suspect, here the increase is more like 430. In such situations, the FTC is supposed to use heightened scrutiny in examining anti-trust concerns.

The online e-mail market is even more concentrated, with 80% owned by Microsoft if the merger goes through.

Market share is one requirement of an antitrust violation, but not the end of the consideration. You still must show that it is harmful to consumers. In Microsoft's defense, it is easy to enter this market, which is why Google, which is the size of an 800 Lb gorrilla hasn't behaved like one in these markets. (they do to some extent in online advertising though) If it took actions that were detremental to consumers, competitors will come about, like Ask, for example, and improve their product, advertise and capture the market. Microsoft will be in a similar boat.

However, one must also consider that monopolization is illegal under section 2 of the sherman act. Microsoft has shown a propensity to monopolize new areas by integrating them into it's operating system which enjoys 90% market share. They already were forced not to do this with browsers and search engines after other antitrust cases. There could be similar concerns with online office products that Microsoft could create to compete with Google Office once it has Yahoo!'s clout in terms of online tools. However, this problem is not yet ripe and would be preventable by later lawsuits or perhaps an injunction.

I think the biggest danger is in online mail. Once people have an e-mail address, it is difficult to switch. You can get a new one, but it is difficult to stop using the old one. If microsoft has 80% share of online e-mail, and probably a smaller but still enormous share of free publicly available e-mail, whether online or strictly downloadable, they can, for example, charge postage. This sounds far fetched, but Bill Gates has proposed this in the past as a way of combating spam. The idea is that postage would be very low and wouldn't effect anyone unless they are sending out millions of e-mails, like spammers. However, Gate's proposal was to have congress regulate this. With this merger, Microsoft will have the power on it's own to implement this or other detremental effects. They can data mine your e-mail and sell the results (they actually already do, as does Google and Microsoft, but for now they don't distribute data, they just use it to target advertise. This could change.) There are other harmful things they could do nobody has yet thought of if they manage to make it harder to switch.

For example, Yahoo! used to disallow mail forwarding, which meant you had to actually use your Yahoo account. You couldn't, for example, forward it to another account while you're in the process of switching. It's one of the big reason G-mail didn't capture more of the market than it did. Microsoft could bring that policy back.

In short, yes, there are significant anti-trust concerns. Whether or not that will actually stop the merger is a much more complicated question. It depends on who has the power to sue, which is a tough question on it's own, and who wants to sue. The current administration doesn't stop many mergers. State Attorneys General may get involved, and so might the EU and perhaps private actors like Google or a consortium of consumers of Yahoo! mail (I would join such a consortium if, say, Google decided to fund it). Yahoo! will probably not sue, but they might take other measures, such as buying back their own stock or entrenching the current board or imposing a poison pill. A lot of major shareholders are in favor of the merger though, so if a third party doesn't get sue over antitrust concerns, I think it'll happen. (If you are a Yahoo! shareholder and you get a letter asking you to vote your shares to board members, make sure you respond and make sure you don't pledge your support to microsoft's board picks) There is a potential "white knight" (colorful technical term in antitrust law for a friendly buyer that will outbid the hostil company in a takeover). Google is a major player here though, don't count out their actions.

BTW: HHI is the sum of the squares of the market shares of the companies in the relevant market. It is designed to minimize the considerations of small companies that are not market players.

It might. If they merge you can be sure that Google will try to make a case for an Anti-trust violation. But to be completely honest I don't think it is a problem. There are plenty of other competitors out there. I don't think Google's case will hold water. It might stall the inevitable but it probably will not win.

we cannot deliver judgment.

it should be fought in the court.

we have to strike between business interest and public interest - both sides have equal right.

let us wait for history

idk