For a few years now, the idea of Microsoft acquiring Yahoo has intermittently made news. For the first time in May 2006, the then Yahoo CEO Terry Semel denied reports of any probable acquisitions. His unflattering comments about Microsoft during the interview made an alliance between them seem unlikely. However, in Feb 2008, just after the Yahoo CEO Terry Semel stepped down as Chairman of the board, Microsoft made a bid to purchase the company, a deal potentially worth $45 billion. This news rocked the internet world and then the tug of war on the price/share between the two companies kept both the companies on headlines for a long time.
Industry experts poured their opinions about this great potential deal.
David Garrity, director of research with Dinosaur Securities in New York, said that a deal would be beneficial for both the companies to take on a common enemy, Google.
Marianne Wolk, an analyst with Susquehanna Financial said that a combination of Microsoft and Yahoo would give them a good chance against Google in the branded advertising business.
“Google likes to be arrogant but if this deal happened, they would have to sit up and take notice. Microsoft hasn’t shown much so far in online advertising but an acquisition of Yahoo would be a very good combination,” said Samir Patel, founder and CEO of SearchForce, a privately held software firm that lets advertisers manage keyword purchases on Google, Yahoo and MSN.
But contrary to all the experts’ opinions and thoughts Yahoo did not blink, as it felt they were worth much more than what Microsoft was offering. Dashing all further hopes of Microsoft, Yahoo on June 12, 2008, announced a nonexclusive partnership with Google, in which, Google will supply it with some search ads, a move that could increase Yahoo search revenue. The very next day, the companies went ahead and announced the agreement allowing Google to sell search ads on Yahoo’s Web site, making this Yahoo-Google saga. Microsoft expressed discontentment and contacted advocacy groups saying that the deal would limit choices for advertisers and publishers and destroy a competitive alternative.
On June 24, 2008, again there were reports of Microsoft exploring a possible deal with Yahoo, by increasing the price offer. This on-going saga leaves us pondering over what it would be like if they merged and not. We don’t like bullies, only one strong player in any field. We want competition. There is a good chance for competition to flourish if MSN & Yahoo merge to take on Google. But over the years there have been several acquisitions such as Borland acquiring Ashton-Tate, HP taking over Compaq. These acquisitions can hardly be described as successful. If Microsoft does acquire Yahoo, will this be another such failing acquisition? Should Microsoft rather spend that huge amount of money in bettering their services than buying a sinking company? It’s for time to tell.





