Microsoft Proposes To Yahoo

$44.6 billion proposal to buy Yahoo

by Rupert Sharp
of http://www.oyster-web.co.uk

Last updated: 4 Feb 2008

Microsoft has recently made a substantial bid on Yahoo to buy the company and mesh it with MSN. The proposed move was discussed on a conference call on the 1st of this month, where Microsoft explained they had a plan to “offer an increasingly exciting set of solutions for consumers, publishers and advertisers” by combining both their efforts to fight into a better position on the Internet market.

Now people have been giving it the 'ha ha! as-if! what if?' comment for ages, especially after Terry Semel's scathing comments about Microsoft's offers in 2006. Microsoft was rumoured to have made a bid to buy the company at that time, but this was subsequently denied. Semel, who resigned as Yahoo’s chief executive in June 2007 and from the board a few days ago, said “[We discussed] search, and Microsoft co-owning some of our search” he said that that idea was already dead in the water, explaining how selling off Yahoo's search was like lopping off an arm. Semel then went on to say about Microsoft's chance in the search market “My impartial advice to Microsoft is that you have no chance”. Now it seems that Yahoo is taking a less aggressive although not necessarily compliant view of this new idea; little has been said in public but they do seem to be considering the offer deeply.

Microsoft has said that this amalgamation services would benefit both companies by allowing them to improve and expand in areas they could not have achieved success in on their own. My opinion, which seems to be backed up by the original offer towards Yahoo's search capability is that search is one of the main things they are after. Currently MSN/Live has the most painfully bad Search Engine amongst the main three, of course the other two in ascending order are Yahoo and of course, Google. Microsoft hinted that the merger would make the company a lot more credible and would make them a definite and powerful search and advertising player alongside Google. Although Microsoft has commented that it simply wishes to be a “compelling number two competitor”.

Google have given the proposed merger of services between the two a vicious tongue bashing, although one that collapsed slightly after Microsoft's response. Google accused Microsoft’s proposal of being a ploy to seriously monopolise instant messaging and email. Microsoft responded with an equally lashing “Google has amassed about 75 percent of paid search revenues worldwide.” and rolled out the list that between both Europe and the U.S Google has over 85% of all of the searches. Google also commented on whether Microsoft where trying to “exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” and went on to talk about how Google believed in taking “Internet openness, choice and innovation seriously.” despite Google's apparent efforts to own every bit of information in the world, ever.

IMHO I believe that if the merger goes through then Yacrosoft will most definitely be a force to be reckoned with. I can imagine that Google hopping up and down with rage about this as there is a chance that it’s going to mean competing with a bigger fish than the two less effective individuals it has been used to. Not implying Google can't handle the competition but things might not be as comfortable for them in the future as it is now.