The Internet search partnership deal that Yahoo and Microsoft unveiled today will likely face intense anti-trust scrutiny. Under the terms of the agreement, Yahoo will start using Microsoft’s new search technology and will cease development of its own, a move that may set off alarm bells in Washington and in Brussels, the seat of the EU’s competition watchdog, since it would essentially mean that the number of players in this space had dropped to two. Microsoft had earlier lobbied strongly against a proposed search tie-up between Yahoo and Google on anti-trust grounds.

Analysts parsing today’s announcement seem to think Microsoft got the best of the deal, paying relatively little money (at least compared with its huge reserves and cash flow) essentially for control of the No. 2 position in search. While Yahoo gets a fair amount of cash out of the partnership, the company will be giving up fundamental search technology—arguably still the key technology of the Internet age. One commentator, Jason Calacanis of the people-powered search firm Mahalo, even went as far as to say Yahoo had committed suicide with the deal.

Source: Wall Street Journal, BusinessWeek

Fed’s Beige Book Sees Recession’s Grip Easing

The Federal Reserve’s latest Beige Book, released on July 29, has most of the 12 regional banks reporting that the pace of economic decline slowed in June and July. In four Fed regions—New York, Cleveland, Kansas City and San Francisco – indicators point to stabilization, while in two regions — Chicago and St. Louis – the rate of decline appears to be moderating. Data to be released on July 31 is expected to show that the U.S. economy shrank 1.5% during the second quarter.

Source: Associated Press

Time Warner Beats Estimates

Time Warner on July 29 reported a 34% drop in profit, to $519 million, for the second quarter. The results were better than Wall Street had anticipated thanks in large part to surprisingly strong earnings from movies, which helped offset ad declines at AOL and magazines.

Source: Bloomberg

Apple Rejects Google’s Apps

Apple has turned down two applications Google submitted for review in hopes they would be added to the company’s App Store. The rejections highlight the increasingly complex relationship between the two companies as both move increasingly into each others’ business territory.

Source: New York Times

Red Ink Flows at Japanese and French Automakers

Results from the world’s leading automakers on July 29 painted a depressing short-term picture for the struggling industry. But signs that a recovery is near are bubbling to the surface. Honda Motor — Japan’s second-biggest carmaker — recorded an 88% annual fall in operating profit to $267 million as demand slumped. But the company lifted its forecast for the full year due to an improving outlook for its global car sales. On the same day, Nissan – Japan’s No. 3 automaker — posted a third straight quarterly loss $175 million. France’s PSA Peugeot Citroen also reported a loss on July 29, but surprised investors after the firm generated cash by slashing production and reducing inventory amid the global auto slump.

Source: Reuters, Bloomberg

American Airlines’ Alliance with BA, Iberia Approved by October

American Airlines expects to win U.S. approval by October for its alliance with British Airways and Spain’s Iberia, according to Craig Kreeger, American Airlines’ senior vice president. Kreeger added the carrier is pinning its hopes on intra-alliance competition and global partnerships to help it survive the current downturn.

Source: Reuters

Sino-American Summit Fails to Make Break-Through

The U.S. and China tried to present a common front on economic co-operation, but remain at odds over climate change after two days of top-level consultations, which showcased Beijing’s growing confidence and assertiveness. Though U.S. President Barack Obama said he would visit China later this year, the summit failed to produce any extensive new agreements.

Source: Financial Times

ArcelorMittal Posts Third Quarterly Loss

ArcelorMittal, the world’s largest steelmaker, posted a third consecutive quarterly loss on July 29 and said it plans to restart some shuttered output as demand recovers. The second-quarter net loss was $792 million. The loss, which included $1.2 billion of inventory writedowns and provisions for job cuts, missed analysts’ forecasts.

Source: Bloomberg

Chinese Construction Stocks Boom

Shares in China’s largest home builder soared during their trading debut in Shanghai on July 29, demonstrating domestic investors’ huge appetite for new listings. China State Construction Engineering, whose $7.3 billion initial public offering last week was the world’s biggest this year, jumped 90% to an intraday high. The movement has fueled concerns pent-up demand may be feeding an unsustainable bubble in asset prices.

Source: New York Times

Tamasek Loses Almost $30 Billion in Value

Singaporean sovereign wealth fund Temasek said on July 29 it had lost more than $27.7 billion in asset value and may allow public investment for the first time in its history. Tamasek will seek “sophisticated co-investors” and won’t sell the “family jewels” for short-term gains, according to Chief Executive Officer Ho Ching, the wife of Singapore’s Prime Minister Lee Hsien Loong.

Source: Bloomberg

Ticketmaster-Live Nation Merger: ‘Serious Competition Concerns’

U.S. Democratic Senator Herb Kohl — chairman of the Senate Judiciary Committee’s antitrust subcommittee — has urged more scrutiny over a proposed merger between concert ticketing giant Ticketmaster and concert producer Live Nation, saying it presented “serious competition concerns.” Kohl has sent a letter to the U.S. Department of Justice to raise a number of issues over the proposed merger.

Source: Washington Post