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Microsoft courting Yahoo: a shotgun wedding

Microsoft and Yahoo are said to be in early stage merger talks. Those rumors caused a 15 per cent jump in the company's stock price on Friday. The purchase would cost Microsoft an estimated $50bn, which can easily be financed with Microsoft stock.

Yahoomicrosoft The deal would be a great embarrassment for Microsoft however. The company for years has vowed to turn its search engine into the world's number 1 or 2 engine. Despite millions of dollars in investments, it is still trailing behind Yahoo and Google.

Buying Yahoo furthermore would only provide Microsoft scale in the advertising market as it would be able to sell all those Yahoo eyeballs as well as the MSN/Live search ones.

But it doesn’t help its Live online application strategy, the market that Microsoft is ultimately pursuing. Integrating the advertising platforms and overlapping technologies will only divert time and management focus away from catching up with Google.

The deal furthermore won't hurt Google the slightest bit. The search engine isn't in the market to buy Yahoo. The growth of its online search market share and advertising revenues are continuing to outpace those of the competition.

Microsoft's buying plans – if real – would make for a case of "if you can't beat them, join them."

 

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May 4, 2007 at 08:45 PM | Permalink

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