Word on the street is that, in light of their latest loss to Google over Double Click and the new Google Apps (MS Office killer) and a possible Google OS beta to be released soon, Redmond is back in talks with Yahoo about a possible merger; even though the business advantages to this merger appear to be much weaker than at this time last year.
While Microsoft and Yahoo have held informal deal talks over the years, the latest approach signals an urgency on Microsoft’s part that has up until now been lacking, the newspaper said, citing sources.
The approach follows an offer Microsoft made to acquire Yahoo a few months ago, which Yahoo spurned… (source: Forbes)
Although these merger discussions are almost as elusive as el chupacabra, and are in no way confirmed by either party, many in the industry think that Yahoo, who was once very interested, may be getting cold feet [read:Hard to get?].
“They’re getting tired of being left at the altar,” said one banking source who has recently had talks with Microsoft. “They now seem more willing to extend themselves via a transaction to get into the game.” (source: NY Post)
This time however, Microsoft has pulled in some financial heavy weights to broker the reportedly 50 Billion dollar deal. That’s Billion with capital B.
The [NY Post] report values Yahoo! at $50 billion; the interest by Microsoft is said to be serious to the point that world renowned bankers Goldman Sachs are advising Microsoft on the deal.
If the deal comes to fruition, the takeover would be one of the largest corporate takeovers in American corporate history, and likely the largest ever in the Tech sector. (source: TechCrunch)
That last point begs the questions: how will this affect search and how will this impact the user? Google has 65% market share on search and Yahoo is a distant second with Microsoft steadily losing share, so a) how will this benefit Yahoo (aside from wheelbarrows full of cash) and b) if Yahoo is on the blocks, why wouldn’t Google be after them instead?
So is this real? Will there be a MicroHoo or an MS-Yahoo!? (or even a Yahoogle?) Well, the social networking community seems to think so. It’s page one in Digg as of this writing and Tech Crunch reports that Yahoo stock is up 18% as of this morning.
And all this comes on the heels of Yahoo CEO Terry Semel’s comments last year (when it would have made more sense for Yahoo to join Microsoft, before Microsoft developed its own ad program).
“My impartial advice to Microsoft is that you have no chance,” Mr Semel said. “The search business has been formed.” (source: Search Engine Land)
Whatever happens, the search landscape will be different, which is probably a good thing for the user and a bad thing for the SEM’s trying to keep up. What do you think?
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3 Comments
The integration of Yahoo and MSN’s paid search systems would effect a major shift in the paid search marketplace. Many advertisers work ONLY with Google, because the market share is so much larger than the second and third place market share holders. By joining forces and expanding the market share that a single campaign can reach, they have great potential to attract ad dollars away from Google.
Even if they don’t integrate their search engines anytime soon, they could integrate the paid search back end. That is, you could run a single paid search campaign with one interface, one account rep, and one invoicing system, but this campaign would run on both platforms. This would be akin to Yahoo adding MSN Live Search to its network of partner search engines. All the market share of running your paid search campaign on BOTH Yahoo and MSN, but without the additional labor that we currently have to expend in order to manage two separate campaigns. This would be very appealing to advertisers, and could be implemented long before most of their other services were integrated.
I don’t think MS would spend $50 billion to pull-in a few extra merged accounts. It’s interesting to look at both companies over the last couple years:
- MSN built a backend from scratch (their first, actually) for both natural and paid search. It has basically had no effect - market share continues to slip.
- Yahoo rebuilt its antiquated paid system with Panama, and market share continues to slip.
- Both companies have had footholds in webmail, calendars, etc. since the late 90’s, and now Google determines what is considered “competitive” in that market.
$50 billion buys shareholder confidence, and the hope that a combined company can stop sliding downward.
I have *no* idea why any shareholder would believe that logic, but I bet MS management is counting on it.
But… that’s only further reason for Google to buy Yahoo, IMO. 50B is a lot of money, but to kill/absorb your biggest competitor would be seen as huge marketing win for Google and maybe even the coup de grâce for Microsoft as an online portal/search engine.
Besides the obvious search engine market share, Google would instantly get [Yahoo’s] shopping portal, the web builder, the personals, the communities, jobs, etc etc - all small units in and of themselves- but collectively, they amount to billions in revenue. I think Microsoft sees this and is worried. It’s very similar to the the Adobe Macromedia merger.