Microsoft/Yahoo! Merger a Good Idea?

NorbMan writes "Last month there was speculation about Microsoft's interest in joining forces with Yahoo! to battle Google. Today, a Merrill Lynch analyst recommended a Yahoo! takeover by Microsoft. From the article: "A Yahoo/MSN-Microsoft combination would have garnered approximately 41% share in the US of search queries [in April] versus Google with 44%.""

Very bad idea

Very bad idea. No one will trust their business to a company called 'Microhoo!'.

Re:Very bad idea

I don't think that a merger like that would result in a name change.

Microsoft merging with Yahoo! is like me merging with pizza. It ends up with a slightly larger me.

Re:Very bad idea

Microsoft merging with Yahoo! is like me merging with pizza. It ends up with a slightly larger me.

While you may feel larger and bigger temporarily, after merging with pizza... after a few hours, the pizza exits with a foul smell, and you're left longing for another merger. True growth can NEVER be achieved by mergers. You need to Grow Up to understand that.

Re:Very bad idea

A Duopoly, after all, isn't very much better than a Monopoly.

Huh? Duoploy? I assume you mean Microsoft and Google? Are you suggesting that having just two companies competing against each other for market share has no advantages compared to a monopoly? And they will be competing, chairs and all. Even just two companies competing against each other to produce the best product is infinitely better than one that has full power and no desire to innovate. Look at Intel/AMD.

The only problem is if they work together to control the market and then share each others profits, but I cannot see that happening.

Re:Very bad idea

The only problem is if they work together to control the market and then share each others profits, but I cannot see that happening.

See the stagnation of Home Depot / Lowes for an example of what else can go wrong. Two entrenched players does not make a competitive market.

Re:Very bad idea

"Where do <yodel>yoooooooooooooooooooooou</yodel> want to go today?"

Why do analysts bother anymore?

Can anyone say antitrust?

Merger would be (doubleplus)Good for America (TM)

After all, Google is the America-hating empire [shelleytherepublican.com]!

This would also counter the European threat to our computers [shelleytherepublican.com], with its shameful and sordid history [shelleytherepublican.com].

As bad as the HP - Compaq merger...

Theoretically, the combined user-base would surpass Google. But many users like me, never visit MSN / Yahoo after acquiring a Google identity (gmail).

The combined HPaq is still below Dell, although prior to the merger, the combn. was much bigger.

Re:As bad as the HP - Compaq merger...

I kept my yahoo address and used it as my primary. After a merger, I would move to Google.

Re:As bad as the HP - Compaq merger...

And computers have a certain amount of "lock in." If a vendor has been supplying you for years, you might have built your system around certain hardware or service assumptions that might not be met if you switched.

Search, on the other hand, is a very fungible resource with practically no switching cost.

Re:As bad as the HP - Compaq merger...

Remember when AOL bought netscape thinking those millions of people who had netscape.com as a home page would become AOL users? It would be just like that.

Don't think so...

Somehow, I think that the moment yahoo joins (msn eats it up) with microsoft, mysteriously half the 41% will move to google or another different engine.

Is not numbers we are talking here, is not even efficiency. IT's TRUST.

Why Yahoo

With $40b in the bank, why not just buy Google and be done with it :)

http://religiousfreaks.com/ [religiousfreaks.com]

Because google will evaporate if MS buys them

First, Google's capitalization is higher than Yahoo's (they are more expensive).

Second, remember when AOL bought Netscape? Something like 40% of their workforce quit the next day. If MS buys Google, the google brain trust (which is were all the value is) hits the door immediately.

Re:Why Yahoo

Google is a a company that afaik writes everything in python, on linux boxes.

Hardly. Remember the story just a couple of days ago about which operating system and browser different companies' employees use? Google employees mostly use Windows! [andrewhitchcock.org] (Insert huge disclaimer about the unreliability of these stats here). Most of Google's software is aimed at Windows users. Native Linux support often comes much later.

As for writing 'everything in Python'? Python is a great language but I doubt if all that much of their code is written Python. A lot of their work is C/C++/Java/Javascript/Ajax/etc...

I know that on the Python homepage it says:

"Python has been an important part of Google since the beginning, and remains so as the system grows and evolves. "

-- Peter Norvig, Google

I would actually be interested to know what products (if any) they have that are powered mostly or entirely by Python. Does anyone know?

Alternative search engines

Face it, there's really no way around google yahoo or msn.

Have you tried finding a good alternative to any of them?
Most smaller engines are powered by either yahoo or gooogle.

More Centralization of market power?

Microsoft has already been convicted of monopoly activity and yet somehow people keep talking merger.

Yep that's it _, we want to allow more centralization of market power.

Up to the shareholders ?

Isn't it sort-of a private matter for the shareholders of the 2 companies to figure whehter they want to do it ? And then the monopoly regulators ?

This monopoly of commercial operating systems for personal computers, and monopoly of commercial word processors for personal computers, is proving somewhat a millstone round the neck of Microsoft. Are they about to sell off these businesses so that they can move on ? Games consoles, search services, etc.

I expect if the price was right, IBM would take Windows and/or Word off their hands. It's only money.

Makes no sense from a platform point of view

Ok, these 'market analysts' look at spreadsheets of market shares, etc. Look at the technology under the hood: Microsoft uses all Windows products. Yahoo uses BSD and PHP as their environment. I'm sure Gates and company would LOVE to be running such a large, critical portion of their business on OSS! Or throw all Yahoo's code away and re-write in .NET? Right!! From a platform point of view, anybody who thinks about this for more than 30 seconds will see that this is a non-starter. Nothing here. Move along.

Re:Makes no sense from a platform point of view

The technology under the hood is totally irrelevant from a business profitability point of view. IIRC, Hotmail did not run on Windows at first either. Over time, Microsoft ported it over. It really isn't so hard to believe that they would do that with Yahoo as well. They would start by porting the back end services (already accessed via internal web services) and then work towards the user interface. They might offshore the work because it is fairly straightforward. It might take five years, but who cares? It would be a small expense compared to the acquisition cost of Yahoo itself.

Bonehead Business Logic

The technology under the hood is totally irrelevant from a business profitability point of view. Hotmail did not run on Windows at first either. Over time, Microsoft ported it over. ... It might take five years, but who cares?

I can smell the money burning when I hear stupid shit like that. The arrogance is stunning. Have you seen the contradiction in your thinking from the above parsing yet?

Who cares? The customer cares, you idiots! They are not going to hang around for five years worth of buggy service. That's Microsoft, though, their precious marketing image is always more important to them than actual service or .... the customer. Yahoo appropriately stands for "You Always Have Other Options."

Genius!

What's better than having the trust and reliability of Microsoft paired with the strategy and insight of Yahoo!

Oh...

Er, for a moment maybe

They'd have 41% for about 10 seconds until users began migrating. There's no way Yahoo could fit comfortably into the MS spectrum of products. The real stickiness for Yahoo isn't search, it's webmail and the other services that get people using it as a portal. They search at Yahoo because its already loaded up in their browser. None of those services are something that MS wants to maintain -- there's way too much friction with MS's existing products. So they either kill it all off or force users toward Live et al, which is not what those users wanted, not the least reason being MS has a negative reputation in this space.

Poisoning all of Yahoo's services doesn't gain you any marketshare in search. Maybe a few percent as collateral damage, but nothing like what's being predicted here.

Only about search?

Does anybody use Yahoo for more than just searching? What about their excellent portal, My Yahoo! [yahoo.com]? It's the one place I always start from to get my daily and intra-daily doses of news, including slashdot. It's great for tracking stocks. It's highly customizable.

What happens when Microsoft gets its hands on Yahoo? How long before this great site stops working properly on anything but IE? Can people just switch to Google and find this kind of service? Does anybody do this anywhere near as well as Yahoo?

For once, the analysts are right

Technologies used are irrelevant, from a business point of view (don't flame that) - it's all about market share. Google are running away with the search market - and with it, the future of advertising. New entrants have no chance, so the only competition is going to come from the existing players getting their act together. Both yahoo and MS have embedded user bases which will erode unless they can get to a par with google. If this means rewriting some code base, or MS having to rely on oss for a while, so be it. If they don't rapidly tackle google, they'll lose a lot of $$ in the medium term, and lose their business in the long term. Of course - one day the US Govt could break google up (Bell style) but they've never done that with MS, so MS really do have to win the web war to survive and at the moment they're being pulped by google. Yahoo may offer a shortcut to victory (or at least a more even fight).

Why do they assume

Why is it assumed that all the people that currently use yahoo will instantly start using the new MSN search? You can't buy search marketshare. It don't work like that.

Re:Why do they assume

because they will simply point search.yahoo.com/search.cgi or whatever to the MSN servers. 99% of the people that use yahoo search wouldnt know the difference. If they could tell the difference, chances are they would be using google instead. Generally the people that use yahoo use it from yahoo messenger, some bookmark thats been installed, yahoo desktop search etc.. they dont use it because they think its actually a good search engine.

Yes it's a great idea.

Instead of two large companies to worry about we only have to fear one even larger company.

Re-coding would be expensive

So, would their first task after merger be to port Yahoo's massive infrastructure over to .NET? It sure would look bad if they kept Yahoo's BSD-based services. Yahoo also has enough integration issues of its own - for example, combining Yahoo Photos with flickr, Yahoo MyWeb with del.icio.us , etc - bringing another bundle of technology into the mix would just completely bog developers down and allow Google to run further ahead. Plus, there is immense resistance to that sort of change - note the outrage a while back when Yahoo bought up various services like eGroups, and planned to merge them with the Yahoo Clubs. People didn't want their Club turning into a Group (despite the fact that the Groups was a better service). Announcing that your Yahoo Group will become a MSN Group (powered by Yahoo) isn't going to go down well.

Also, perhaps combining the two services wouldn't result in the combined marketshare? I use the search.yahoo.com interface on occasions to get a second opinion to go with Google - surely various other people use various sites in this way. If you turn two sets of results into one, you get one slice of this pie, instead of two. And will the shiny new merged services have every single feature the two previous ones did? I think not, as the most likely course of action will be "throw the worse technology away, add a few features to the better one, and call it a merger". So, you'll lose everyone relying on features X, Y, and Z who now have no reason to use your service.

God Damned Suits

Being able to make a good search engine is a skill that only a select few posess. They guys at Yahoo aren't bad. If something like a hostile takeover or merger occurs, how many of them are going to resign within a matter of weeks? I'd venture to say "a lot". People don't like it when established company atmosphere is changed all of a sudden. If Microsoft were to gobble up Yahoo, of course they'd law down a bunch of changes and piss off the best techies. When that happens, Microsoft will have pretty much paid a couple of billion dollars to buy "*.yahoo.com". It's a valuable domain name, but not that valueable.

LK

M$ merging with ANYONE is bad!

What SHOULD have happened as a result of the anti-trust action against M$ was a ten-year moratorium prohibiting M% from merging with or acquiring ANY OTHER COMPANIES! They should have been limited by the court to whatever they could accomplish internally, without swallowing other companies and reducing competition further. Total purchases of products from other companies should also have been forbidden, as well as exclusive licensing (I guess a non-exclusive license might be OK).

But of course the Bushwimps would never think of such a thing so they settled for the traditional 40 lashes with a wet noodle.

Optimistic retention numbers

"41% share in the US of search"

This assumes that the merger doesn't cause users to run away. Consider both Yahoo's and MS's recent efforts to revamp their website: both caused drops is marketshare.

The only company gaining serious traction in search is Ask.

Smart money says pay for a little guy with upward mobility. If MS were smart (and it isn't) they'd go after Ask. Merrill Lynch is just brainlessly applying old merger principles to new economies. It's not helpful.

In the computer business, smart money is on growth, not marketshare.

Creepy.

Big Brother + Viruses + China = :(

MSN and Yahoo search engines?

Is there a search engine available at MSN or Yahoo?!?!

This should be blocked by the FTC!

The only motive to do this for microsoft is to make its own monopoly position stronger. Mergeing with yahoo would result in a stronger position versus google, makeing the possebility for elimenating google even greater. Remember: microsoft does NOT really need yahoo (it's already got MSN). Microsoft only needs yahoo when it wants to elimenate google.

Why would Microsoft want to elimenate google? Well, for starters: it's a big, high profile, highly visible company... which just happens to support Open Source Software, and that includes... Linux (do you ppl remember Microsoft declaring 'war' on Linux?).

If this merger is allowed to continue, we might not have a big, high profile, highly visible google in a few years... and that would be very convenient to Microsoft.

Sum of the Parts can be less than the Total ...

seen the tactit assumption that the markets parts add up to the new total. This assumption is made too often. However, if the parts are inherently a misfit, the total too often is much less than the sum of the parts.

It seems this advice was given in desperation, since the goal should be to enhance the whole. That is, just becoming bigger does not assure retention of markets. Moreover, misfits can destroy existing value. Despite the currently available cash horde at Microsoft's disposal if these units do not mesh to create greater value than their independent parts the premium paid is not worth the price.

If this action is taken, at least, no matter how bad the executive decisions are it is unlikely to destroy MS immediately as Borland did to itself when it bulked up to fight MS. Borland simply did not recognize the value of some of the pieces that could have generated positive cash flow despite not being premier products.

no way

The corporate cultures of these two companies just couldn't live together. Microsoft a technology company good at enforcing the status quo, Yahoo is wannabe technology company that survives by being smarmy and sleazy, while forced to follow companies with better hiring practices and less conservatism in the ranks. I pray for you Yahoo employees, oh wait you're already praying...you should too, considering how you make your money.

This might be the best thing for Google EVAR!!!!

Seriously! No question that Yahoo does search better than Google. There is a prevailing, ridiculous reasoning among companies that once you buy a smaller company you somehow become that company and that's great for competitors.

It's been great for Southwest airlines. They do air way better than everyone else, their market cap and growth prove it. I used to work for American and everytime Southwest came into a market AA closed up shop and left (Nashville hub anyone?)

American planted themselves a hub in San Jose California (primarily to get Tokyo routes) and it used to be that AA and United controlled traffic intra-California. Sure there was AirCal and PSA but the solution was to just buy them up. Then came the day that Southwest came into California and within two years became the largest intra-California carrier. American's solution? Sucker Reno Air (then based in Reno) to take over their gates. Southwest got a GREAT run for their money and actually had a formidable opponent.

So what did AA do? They bought Reno Air and brought to it the AA culture and Southwest said THANKS!!!! They just bought out Southwest's competitor and AA was an easy target to pick off because of their inefficiency that's pervasive among legacy carriers.

Know why Warren Buffett makes so much money? He insists as part of an acquisiton that current management stays and then gives them a fat pay raise. If it ain't broke, don't fix it and in M&A, the "M" tends to do a lot of "fixing".

If MS buys Yahoo! and brings the MS culture, then the union will not represent a significant threat to Google. Yahoo! does search better than MS and bring the MS culture and mindset only dumbs it down.

When you chain two people and throw one off the bridge the other tends to go.

Why? For marketing.

Microsoft seems to have lots of ideas for cornering the market, problem is they don't work on thier market as much as trying to corner all the rest (unless to make it in favor of thiers.)

Until Vista comes out and proves to be something that solves their issues of worms, security, and spam zombies I think thier resources are best suited on what they already have (fix Windows, Outlook, IE, etc.). And if Vista doesn't, well they will need to still thier problems.

Since Microsoft is primarily a manufacturer and marketer of thier OS we already know any aquisition of a search service is an extension of thier software (and video game) marketing department. Do they care about kids wanting to get the facts right for thier book report? only as far as it helps sell Windows/Office, etc. and keeps them there, or helps generate revenue through Windows/Office, etc.

I dunno about this...

I dunno, that's a lot of evil to concentrate into one place.

Re. the naming: Back when IBM-acquiring-Apple rumors used to circulate back in the 80's, the joke was this: What do you call the merger between IBM and Apple? IBM.

Ted Turner says "no"

This would be a disaster on the order of the AOL-Time Warner merger. Kiss your market cap goodbye.

hmmm

Two companies, who both have products I never use, are about to merge... Move along, nothing to see here.

The Last Yahoo

Such a merger would be the death of Yahoo. interminable antitrust trials would follow, Yahoo would bleed employees and the end results would be
 

1. Microsoft further hobbled by antitrust restrictions,
   
2. Yahoo permanently wounded,
   
3. Google picks up the unhappy users.
   

Yahoo is in trouble and needs to do something. But such a merger would almost certainly kill Yahoo rather than save it. Microsoft would be financially unaffected, remaining a big bag of money.

yahoo-msn-live-plus

Now i just can't imagine how bloated will the new yahoo-msn-live-plus messenger be! Maybe AOL can join the merge too (oh god)

What's in a name, anyway?

Ok, here we have Microsoft, Yahoo and Google. All three are well known for their contributions to the 'computing' and internet world.

Google: Search Engine, Applications.
Yahoo: Social Networking, Advertising.
Microsoft: Operating Systems, Applications.

Each of them, with Microsoft having probably the largest 'geek' database on the planet, is trying to encroach on the realm of another. The first letters of each of their names makes the acronym "GYM", which reminds me of the time sweaty jocks were fighting over who was going to humiliate the cornered 'nerd' first.

Well, they have data, they have also examined it (most likely in many different facets)... and patterns do actually tend to make things easier for people who want to make the most money off the 'herd'. The interesting thing is that those big three have enough data from the populace to ensure that our children will already have bought into what they're planning to market (whether it is vaporware or not).

Will there be an advantage if Microsoft purchases Yahoo!? Sure, but I don't think that will actually affect those using search engines. Google is ahead of the game and they 'started' with the best marketing tactic in the computer world. Actually having a useable product. Yes, nowadays they do have beta applications, but that's expected. I do, however, like the idea of presenting a working product to the world (even if incomplete) as opposed to selling a bunch of 'ideas' and powerpoint presentations.

I tend to think that Google would be unaffected.

Better Idea

Would it be better if Google was to buy Yahoo?

Investment Bankers!

Merill Lynch makes a lot of mony from investment banking. If they could bring off a merger this large they would make a fortune. Whether this is a good idea for the companies themselves or the market in general is somewhat irrelevant.

Most mergers end up hurting both firms. The turmoil and uncertainty surounding a merger would cause the best Yahoo employees to leave and maybe also some from MSN. Yahoo uses little, if any, Microsoft technology and Microsoft would have to replace it all with windows just to save face. This internal strife around such a technology change would cause all of the best to leave. Additionally there will be a huge competition between MSN and Yahoo employees and who's technology are you going to use.

Anuyways, Microsoft, given their past business practices, should not be allowed to buy anybody.

Boohoo

Just when I was starting not to despise (some aspects of) Yahoo so much again at long last, this. No matter how far fetched, just it having been said, makes me feel... nervous.

I shall answer this question with another question

Would Dracula merging with Frankenstein's Monster to take out, uh, Buffy, be a good idea? No, you'd just get an even uglier monster (especially compared to the sexy Goog- uh, Buffy) with a combination of skills that would seem to plug the others' holes (eg, Dracula's shapeshifting plus FM's zombieness) but really just leave it trying to focus on too many things at once (Blood? Electricity? Love?!). Plus as any geek knows, Buffy always wins.

Whatever happens, we'll lose some free services.

I'm convinced that popular services like Yahoo and MSN Groups will be casualties of a merger of this sort. You currently have both of them primarily because they wanted to compete directly with each other at any cost. After they merge, they'll start by eliminating duplication - meaning either Yahoo or MSN Groups will go. Then, they'll try to find ways to make people pay a fee to use whatever service is left - and that will destroy much of their usefulness. (EG. Freecycle pretty much works through Yahoo groups - and it wouldn't make much sense to have to pay monthly fees to browse listings for free giveaways to those who can't afford to buy them.)

Suggestion

Why don't these two companies just improve their respective products...?

What about if MSN was Merged into Yahoo??

So many creative slashdotters and not one of them thought that maybe if Microsoft bought Yahoo then it would be a good way for them to offload their sinking MSN division to Yahoo. This would be much better than a spinoff of the division. Also this way it would not attract Antitrust Attention while Microsoft still controls a large portion of the industry and can subtly promote Microsoft services through it.

I have always thought that microsoft needs to diversify and get rid of some units to be more agile. This would be the perfect way to do that. Also in general MSN users would not be harmed as much by the move to yahoo as yahoo users would be with a move to MSN.

Think about it Microsoft, if you could pull this off you would have a much larger portion of the search business. Of course now it doesn't prominently feature the Microsoft name but is that really so important.

Powering things in the background and pulling sinister strings without people knowing is where it's at.

Now I am not saying that microsoft would have the insight nor would Ballmer be humble enough to follow this strategy. But if they did then the possibilities would be much better then the other way around.

Any thoughts on this strategy? What would be the downsides of this? I can never think of downsides to my own ideas but that is what slashdotters are so good at.

-------
My Sig - it is RFID Enabled

MSN + Yahoo

then the Yahoo services would be unavalable till MS gets Yahoo off Linux & onto ...

This does not make sense

Look at it is this way: Yahoo is already using a relatively open, web-based strategy to make money. Meanwhile, Microsoft has poured hundeds of millions of dollars into MSN, first as a way of binding Windows-using Internet users to Windows even more tightly (which didn't make money), and then more recently, making steps of not requiring Windows to get interesting functionality (and that still might not make money). Seems to me Yahoo should go it alone, and if MSN's new strategy fails, just hire away the good engineers working on the new-style MSN.

Re:takeover = losing customers?

And what if Microsoft took over Apple? Would everybody magically start using Linux?

Actually, a lot of Apple people probably would. Or maybe they'd start a new BSD distro to revive some of the OSX spirit. That is of course assuming that MS would try to "enhance" OSX's Windows interoperability. If they left it alone, then probably not much would happen.