It had been rumoured for a long (long) time, but the time has finally come, as Microsoft proposed to acquire Yahoo! for roughly $44.6 billion in cash and stock
And Microsoft isn’t shy in saying that it wants Yahoo! to go head-to-head with Google:
“Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers.”
Funny enough, maybe Microsoft was “forced” into this action when it decided to go against Google in search by buying AQuantive inc, as one analyst from Bloomberg had already predicted. That purchase gave them a good share of advertisers, but just not enough to compete with Google, so they “had” to go after Yahoo!.
But there were a couple more reasons (tip of the hat to Shoemoney):
- MSN Live’s algo is horrible and it is not getting any better. Yahoo! has a far better one.
- MSN has an ad strategy without the necessary volume in order to attract more advertisers.
- Yahoo! has great Social Media properties (Answers, Flickr, and De.li.cio.us), and MSN has virtually none.
- Yahoo! has a huge array of media properties and a lot (500 million???) of users, and is in the process of streamlining its structure.
Did Microsoft just make the right move? Is Microsoft the Yahoo! fix that CEO Yang was talking about?
Yahoo! could have just sold its search business to Google and focus on content, which they are great at. You can in fact understand why this deal hasn’t come primarily as a Yahoo! idea. It’s far more in Microsoft’s interest to acquire advertisers to serve their future online services.
We all know Microsoft is an old giant. I mean, Gates didn’t see the Internet coming until he was forced to. Again, with cloud computing, Microsoft is being forced into change, this time by Google–forced into a field in which it has done poorly in the past few years.
In the US the merger may mean that Microsoft begins to look like a competitor (in raw numbers, at least):
5.6 billion searches on Google x 2.2 billion searches on Yahoo! + 940 million searches on MSN = 3.1billion*
*comScore core search report Dec 2007
But what will it mean for search in general? Will we be getting a better search engine? Hard to say. Sure, we will have the combined force of brains from two major players, but IMO Live Yahoo! will still have a hard time competing with Google. Furthermore, there is the problem of merging two huge companies together, with all that entails – layoffs not being the less important part of it all…
So, what’s your opinion? Will we have a Live Yahoo? a Yahoo Live? Or will things remain pretty much the same, just with more MSN ads all over the place?
