Appearing before the Senate Judiciary Committee, Microsoft General Counsel Brad Smith said Yahoo Chief Executive Jerry Yang made the comments to Microsoft officials during a June 8 meeting between the companies in San Jose. Microsoft has been in off-and-on talks with Yahoo about a merger and is adamantly opposed to the advertising deal that Google and Yahoo signed last month.
"Jerry Yang... looked us in the eye and said 'Look, the search market today is basically a bipolar market: On one pole, there's Google and, on the other pole, there's Yahoo and Microsoft both competing with Google'," Smith said.
According to Smith, Yang then said, "If we do this deal with Google, Yahoo will become part of Google's pole. And Microsoft... would not be strong enough in this market to remain a pole of its own."
Smith said he and other Microsoft officials couldn't believe Yang made the comments.