[dundee] Google's Response to the MS bid for Yahoo

[Rick]

On 04/02/2008, Gary Short <gary at garyshort.org> wrote:
> > As someone noted recently. The only asset Yahoo (Yawho?) has is flickr
> > and Microsoft is going to put themselves way into the red purchasing
> > them.
>
> What about their email and messaging customer base? I think this is what MS bought them for.

Yes, the IM and email customer bases are of some value - and are
almost certainly worth more than flickr, but the real reason for the
acquisition is simply online advertising.

Microsoft have been wanting in on the ads business for ages...
Remember previously their largest *EVER* acquisition was the $6bn
Aquantive acquisition which was precisely in this space:

http://news.bbc.co.uk/1/hi/business/6670227.stm

Obviously the Yahoo! deal would secure them a much lager slice of this
market.  Combined with their MSN properties it's estimated they'd own
40% of the online ads market.

http://paul.kedrosky.com/archives/2008/02/01/yahoo_finally_c.html

Personally though, I'm not convinced the deal is a good thing for the
tech-sector.  As MS will leverage Yahoo outside of the ads business.
Yahoo! has also historically represented an alternative exit strategy
for technology investors, with them gone there aren't many options
left - which may damage the startup space.

Further to this you have to worry about MS's attempts to consolidate
their products/backends, which will probably be another hotmail-like
disaster.  Such timewasting would likely only let the likes of Google
get further ahead.

Further you have to wonder if the 2 companies are culturally
compatible... Will this be another AOL/Timewarner?

We do however need more competition search and online advertising.
I'd personally favour a newscorp acquisition, if only because they
have less leverage on other aspects of the tech-business.  Anyone care
to lend me $50bn for a counter bid? :-)

Some links can be found here:

http://del.icio.us/InkyHarmonics/microsoft+yahoo+acquisition

-- 
Rick Moynihan
rick.moynihan at gmail.com
http://sourcesmouth.co.uk/blog/