Microsoft CEO Steve Ballmer rebuffed Google's accusations that an acquisition of Yahoo would be anti-competitive.
The bid was made public Friday, prompting the response from Google over the weekend. Ballmer at a news conference Monday, ceded ground to Microsoft's arch rival in order to justify his company's $44.6 billion cash-and-stock offer for Yahoo, which if accepted would fall under the scrutiny of US and European regulators.
"Google's clearly got a dominant position," Ballmer said. "They have about 75 percent of paid search worldwide. We think this enhances competition and anything else would be less good."
A Google executive struck back at Microsoft on Sunday, charging that a combined Microsoft and Yahoo would control an overwhelming share of email and instant-messaging accounts as well as portal traffic.
David Drummond, senior vice president of corporate development and chief legal officer at Google, further suggested that if Microsoft buys Yahoo it might try to unfairly use its dominance in those areas, just as it did in the PC market.
Monday's news conference, in which Ballmer spoke with chief financial officer Chris Liddell, appeared to put further pressure on Yahoo's board to accept the offer, which at $31 a share represents a 62 percent premium over Yahoo's closing price last Thursday.
"We think it's an extremely competitive offer," Liddell said.
In a Monday filing with the US Securities and Exchange Commission, Yahoo disclosed an email sent on Friday by CEO Jerry Yang and Roy Bostock, non-executive chairman of Yahoo's board. "First, we want to emphasise that absolutely no decisions have been made and, despite what some people have tried to suggest, there's certainly no integration process under way," the email read.
Ballmer continued with a hard push as to how a deal with Yahoo will let Microsoft move faster in building out areas such as search, online services and online advertising.
"We are going to have to innovate like crazy," Ballmer said.
But he also stressed how long it could take for a Yahoo deal to eventually benefit shareholders. Ballmer said he looks at whether investments will pay off five to 10 years down the line, but investors often want to see results in three years.
"Sometimes those investments look smart, sometimes it takes a while for them to pay off," Ballmer said.