• by Wendy Davis , Staff Writer @wendyndavis, July 16, 2008

Senators at a hearing about the Google-Yahoo search deal reacted as if Microsoft counsel Brad Smith handed them a smoking gun when he testified that Yahoo chief Jerry Yang once boasted that the agreement would hurt Microsoft.

At a June 8 meeting with Microsoft head Steve Ballmer, Yang supposedly said that search was now "bipolar," with Google at one end while his company and Microsoft were on the other. "[Yang] said, 'If we do this deal with Google, Yahoo will become part of Google's pole,' " Smith testified. He added that Yang also threatened that the deal would leave Microsoft too weak "to be a pole of its own."

The lawmakers immediately perked up, happy to have something they could pounce on. Under questioning, Yahoo's general counsel Michael Callahan said he disagreed with Smith's characterization of the comment. Callahan also said he didn't recall Yang making that particular remark.

But lost in the drama of the confrontation was whether Yang's supposed statement is all that relevant. Even if he did indeed boast to his arch-rival Ballmer that a Yahoo-Google deal would hurt Microsoft, that wouldn't make it true. For that matter, we don't know if Yang even believed it or, as CEOs have been known to do, was simply posturing in the face of Ballmer's hostile takeover bid.

There are legitimate questions surrounding the Google-Yahoo search outsourcing deal. But whether the deal will hurt competition should turn on objective facts about the state of the market, and not angry boasts by company executives embroiled in an attempted takeover.