Unbelievable. The rumour of this move has been kicking around since at least 2006, when Microsoft started ramping up its search engine efforts at live.com. But now it's finally happened, Microsoft Corp. is offering $44.6 billion in cash and stock for search engine operator Yahoo Inc. Really, I'm so shocked I had to blog on it right away.
I have to wonder how quickly this offer got put together since it was only in the past 10 days or so we saw Yahoo making moves to cut its workforce, then they actually did it this week, cutting 1000 job. It seems to me Microsoft made this move now as opposed to earlier because they saw Yahoo at their weakest. Although, if they were really out for an advantage, would they be offering 60% over their market value? Striking at a moment of weakness is usually done for bargain-hunting... I guess if that was their strategy they'd have waited another year or so.
But What Comes With the Deal?
If this means Vista is going to get that damn Yahoo toolbar I'm switching back to Linux.
Seriously, many of Yahoo's services already run on Windows so a company of their size likely already is one of those enterprise partners that gets to actually talk to Microsoft's software engineers. That wouldn't be anything new. Maybe Yahoo will get some influence at the OS planning meetings? And I suppose Yahoo Instant Messenger and MSN Messenger would meld into one eventually. What will email turn into? Ya-Hot-Mail? That sounds terrible.
On the other side, Yahoo has an advertising program a-la Google AdWords and early reports said it was doing quite well. I would say this is the jewel in the crown for Microsoft. Yahoo spent 2 years or more developing it, so owning this would give Microsoft a big leap forward.
I could also see Yahoo turning back to a "directory service" and let its searching and indexing move over to live.com (or be running on the same engine as live.com). I think Yahoo's search and indexing has been in-house since they started building their AsWords competitor so they could contribute to live.com as well.
This Could be the Last of the Big Deals?
Really, after this one, what kind of a buyout could be any bigger? Google buying Sun would definitely be up there, and if MSFT+YHOO actually happens I reckon Google and Sun is a real possibility.
Moves of these kinds are not inherently bad, but if Microsoft and Google just go around buying everything doesn't the market actually get smaller in a way? That is, we've had about 10-15 years of stunning diversity in major tech companies and that's what's made the industry what it is today. If it turns into Google vs. Microsoft everywhere you turn, is there going to be anything worthwhile to do or see on the web or will it just be one giant game of Othello?
Update: Here's something interesting... Terry Semel stepped down from Yahoo's board of directors just yesterday. Now, did this offer appear this morning because a) Terry Semel is out of the board; b) Yahoo's end of year results are in; c) Nothing changed from this morning, Yahoo is vulnerable because they're restructuring and laying off?
Tags: microsoft, yahoo, big deals