Feb 4, 2008

[Web] Microsoft's Yahoo Bid

Flickr: Photo-Mojo - Yahoo Microsoft Messengers Make Nice
Yahoo Microsoft Messengers Make Nice
by Photo-Mojo.


How far back do you have to go to start talking about this story? Should you be content with talking about former CEO Terry Semel completely leaving the board last Thursday? Should we go a bit further back to the announcement of 1,000 jobs being cut at Yahoo starting next month in an effort to deal with improving their bottom line without announcing a strategy for the future?

We can keep digging back into Yahoo's colorful history as much as we'd like to but the fact of the matter is that on February 1, 2008, Microsoft forwarded an "unsolicited" $44.6 billion bid for Yahoo, thus providing them with an entirely different strategy moving into the future. Here's Microsoft's letter to Yahoo in case you're interested.

Of course the news raged against the blogosphere like wildfire. High profile tech sites like CNET already have a dedicated section following the story and of course everyone is throwing in their two cents' worth.

Initial blog reactions were more centered around humor with jokes along the lines of how merging a second tier search engine with a second tier website won't result in an online presence strong enough to unseat Google from internet supremacy just yet. Others have written how it there would be some sense of poetic justice served if the resulting takeover would give Yahoo users the same dreadful experience that all those other companies that Yahoo has bought out over the years had to go through. Then, of course, things began to get more and more in-depth.

Valleywag has moved from comparing Yahoo's existence to that of a child actor in a downward spiral in recent years to trying to figure out who won't get the axe at Yahoo should the Microsoft deal push through. Let's face it, it is a takeover and nor a merger after all. Oh, and of course they also had to remind us that this bid wasn't totally unexpected, for as long as you've been paying attention.

The folks over a WebWare took a more serious bent and considered the cultural differences between Microsoft and Yahoo considering the takeover and how another icon of the internet age is bound to be lost to the Microsoft juggernaut. Google-watcher Ionut, the genius behind the Google Operating System blog ran a pretty comprehensive review of two companies have previously tried to block Google's acquisition of Doubleclick. Talk about irony.

That brings us to Sunday when Google finally broke their silence with official statement and what will theoretically be their last word on the matter as well. Naturally Microsoft was very quick to respond in their own fashion.

This struggle has scarcely begun given the negotiations that will need to take place between Microsoft and Yahoo (their stock price has already climbed up to the $28 range over the weekend from Thursday's $15 stock neighborhood) and the inevitable FCC approval hearings and accusations of this leading to monopolistic practices, where do we factor in all this? Do we want to see Yahoo acquired by Microsoft?

Just think about the brilliance that was the Passport system and how many headaches that created - do we want those same monkeys handling the many services that link to every Yahoo account? Flickr is bad enough under Yahoo's control, but what more under Microsoft? No matter how much Microsoft "respects" the Yahoo! brand, do you seriously think that it's going to survive Microsoft's higher priorities of boosting their own Windows Live line of services? Depending on whether or not Yahoo tries to resist this takeover attempt will ultimately determine if Google is justified in calling this a "hostile" takeover just yet.

Let's get realistic here - will the joining of these two companies really given them the ability to challenge Google from where it stands as king of internet search and online advertising? Perhaps not, given their success is not about the size of the workforce or the number of subscribers but their ability to dynamically innovate new technology and cater to the needs of the users. What this buy out is only going to accomplish is the murder of one of the web's most iconic brands and a greater need to migrate to Google's services in order to escape the clutches of Microsoft. Go figure.

Now all we can do and wait to see how this story will unfold.

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