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%.""

Re:Why Yahoo

[mattyrobinson69]

Probably because of two reasons - Google is a a company that afaik writes everything in python, on linux boxes. Their search runs on a linux cluster - something microsoft wont beable to compete with any time soon. Also, it probably wont be allowed by the american equiv of the monopolies and mergers commission

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

[Tatarize]

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

For once, the analysts are right

[gjuk]

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).

Re:Why Yahoo

[MarkByers]

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?

Re:Don't think so...

[john_chr]

But will MS shoot themselves in the foot by insisting that all that nasty Yahoo BSD unix infrastructure is ripped out and replaced with shiny new Windows Servers?!? By the time Ms-Yahoo recovers from the ensuing fiasco Google will have eaten their breakfast, lunch and dinner. Did they learn anything from the Hotmail takeover? This would easily be an order of magnitude (or two) bigger.

Re-coding would be expensive

[kirun]

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.

Re:Very bad idea

[MarkByers]

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.

God Damned Suits

[Lord Kano]

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

Optimistic retention numbers

[SlappyBastard]

"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.

Re:Don't think so...

[sasdrtx]

Yep. I don't know if these companies are stupid enough to actually pursue this, but it would be an disaster of biblical proportion for both. Which is why I'd love to see it happen.

I can't see the slightest of business reasons to merge. Where are you going to get any synergy or economies of scale? Microsoft is way too big already (for its own good, much less the rest of us). They should be thinking about spin-offs, not acquisitions.

Re:Ask sucks...

[SlappyBastard]

1. I'm not a big fan of mixing personal sentiments with financial ones.

2. I'm not necessarily sold on Ask. I just suspect that for return on value, you'd get more out of ask than you would Yahoo, because Yahoo appears to have extended their brand as far as possible.

3. If anything, I'd offer the argument that MS should get out of the search business altogether. Focus on what you do well, and trim experiments that fail. I think we'll all agree that MSN/Live is never going to overtake Google, and will probably never overtake Yahoo.

4. On the subject of overtaking competitors... Whether you like XBox or not, MS clearly made a mark in a market where many people didn't think MS would last through its first generation (at least not by anything except brute force). By the time Sony is done going bankrupt and pissing every electronics consumer in the world off, MS stands a legitimate change of being the #1 console gaming system manufacturer in the world.

It's been my experience that strong upside, which is what MS would need from any merger/buy, is not found in solid and stable enterprises like Yahoo.

The question is, does MS want to become Pepsi to Google's Coke? If so, then Yahoo is a good investment.

If not, MS needs to absorb a brand with upside (such as Ask), rethink its entire approach with MSN to generate some upside (unlikely, since MSN is now the ugly pig), or get the hell out of search altogether.

I'd also offer that if "buying marketshare" is your view of Ask and MS, then the two might in fact make an ideal pairing, since they think alike.