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Regulatory Tunnel for Microsoft is Nearing End

January 28, 2008

Mark Ostrau, Co-Chair of the Fenwick & West Antitrust and Unfair Competition Group, was recently quoted in a FOX Business article entitled, "Regulatory Tunnel for Microsoft is Nearing End."

Microsoft's poor relationship with U.S. and European regulators shouldn't stop them from eventually acquiring Yahoo. Although Microsoft expects regulatory delays in Europe, company officials would not consider the purchase if they thought the hurdles were too high to overcome.

"They aren't going to pick the fights they don't need to," said Ostrau.

The fact that Microsoft is not the dominant player in Yahoo's market could provide a strong argument in winning approval from regulators.

"Normally, when regulators look at mergers, they focus a lot on how the companies are going to act in the future, so there's a bit of trust needed there," Ostrau said. "There's no trust there for Microsoft and the regulators."

There are some signs that Microsoft is becoming more open to the demands of regulators. Last week, they agreed to provide several of their proprietary software designs free in order to allow third-party software companies to make products more compatible with Microsoft's Windows and Office products.

"This is a chance for Microsoft to show they can do this in a cooperative way with Europe," Ostrau said. "If they go to the European Commission and they are very open, it's a chance to change the dynamic of the relationship between the EU and Microsoft."