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Microsoft/Yahoo Merger to Take on Google? 183

Mz6 writes "One faction within Microsoft is promoting a bold strategy in the company's battle with Google: Join forces with Yahoo. That would be a major departure for Microsoft, the software maker that is legendary for toiling on its own until it captures a new market. However, people familiar with the situation say that Microsoft has considered the idea of acquiring a stake in Yahoo, and that the two companies have discussed possible options over the course of the past year. Currently, talks of an equity stake in Yahoo don't appear to be active, given that Microsoft is focusing on a reorganization that it hopes will re-energize its effort to compete with Google. Two wild cards remain: Steve Ballmer, who has historically shunned large acquisitions, and Yahoo co-founder Jerry Yang, whose support would be key to bringing the necessary Yahoo shareholders on board for a deal. Mr. Yang and others in Yahoo would be hard-pressed to sell to Microsoft, people close to the company say. However, people familiar with Microsoft say its top management remains open to a deal with Yahoo as pressure grows to perform better against Google. The increasing pressure on Microsoft -- not just from Google, but also from its own shareholders, as well as from advertisers that want an alternative to Google -- could help to justify the acquisition or some kind of business collaboration, these people say."
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Microsoft/Yahoo Merger to Take on Google?

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  • Well... (Score:4, Insightful)

    by metamatic ( 202216 ) on Wednesday May 03, 2006 @10:32AM (#15253718) Homepage Journal
    I guess it would focus the evil [boingboing.net] in one place.
    • Re:Well... (Score:3, Funny)

      by Basehart ( 633304 )
      "I guess it would focus the evil in one place."

      Yeah, Yahoo certainly has the right stuff [washingtonpost.com]!
    • Re:Well... (Score:2, Funny)

      by sgt_doom ( 655561 )
      WOW!!!

      They could give up twice as many dissidents to Chairman Hu and China's Department of Public Security.

      Another plus in the Global War on Terror!!

    • ...but Yahoo doesnt have any of the web infrastucture MS produces. They certainly dont use MS Servers.
      • Perhaps this move is intended to boost MS's stats at Netcraft. If they convert Yahoo's server farm to MS technology, it's gotta be a significant % increase in the number of MS servers out there. I'd expect that, ironically, this would help Google in the long run. :D
    • So Microsoft will censor blogger posts, and then yahoo will help jail the bloggers for the posts no one could read? :) Ouch.
    • I always figured Microsoft was the Bork, but now they have made an unholy alliance with a sworn enemy to divide neatral Poland...

      What does that make them??
  • Summary is a troll - there is no mention of a 'merger' in the article text, just cooporation

    Here is the article, so you don't have to sit through the silly flash into:

    A Microsoft, Yahoo Tie-Up?
    MSN Veterans Want a Pact
    To Bolster Web-Search Ads
    And Better Challenge Google
    By ROBERT A. GUTH and KEVIN J. DELANEY
    May 3, 2006; Page C1

    One faction within Microsoft Corp. is promoting a bold strategy in the company's battle with Google Inc: Join forces with Yahoo Inc.

    That would be a major departure for Microsoft, the software maker that is legendary for toiling on its own until it captures a new market. However, people familiar with the situation say that Microsoft has considered the idea of acquiring a stake in Yahoo, and that the two companies have discussed possible options over the course of the past year.

    Currently, talks of an equity stake in Yahoo don't appear to be active, given that Microsoft is focusing on a reorganization that it hopes will re-energize its effort to compete with Google, the fast-growing provider of search services and advertising.

    Two wild cards remain: Microsoft Chief Executive Steve Ballmer, who has historically shunned large acquisitions, and Yahoo co-founder Jerry Yang, whose support would be key to bringing the necessary Yahoo shareholders on board for a deal. Mr. Yang and others in Yahoo would be hard-pressed to sell to Microsoft, people close to the company say.

    However, people familiar with Microsoft say its top management remains open to a deal with Yahoo as pressure grows to perform better against Google.

    The increasing pressure on Microsoft -- not just from Google, but also from its own shareholders, as well as from advertisers that want an alternative to Google -- could help to justify the acquisition or some kind of business collaboration, these people say.

    Since 2004, Microsoft has invested heavily to better compete with Google but it has yet to boost its share of search or online advertising. At the same time, Google has released products that some industry experts say could over time eat into Microsoft's core software businesses.

    Microsoft executives say that they are investing for the long haul, and that the online-search market is still nascent and has much room for growth. A Microsoft spokesman declined to comment. A Yahoo spokeswoman declined to comment, saying the company doesn't discuss "rumors and speculation."

    In one sign that Microsoft may be serious about major acquisitions, it has hired search-industry executive Steve Berkowitz to head MSN, the Internet unit that is building the Web-search business and is leading Microsoft's charge against Google, including Web search. Mr. Berkowitz, the former chief executive of search site Ask.com, is viewed as a likely deal maker at MSN, having completed more than 40 acquisitions in his career, according to a person close to the matter. He starts May 8. Mr. Berkowitz couldn't be reached for comment.

    Microsoft's recent quarterly results provided a picture of the pressure it faces from Google. On Thursday, Microsoft said the MSN unit fell into the red and its revenue declined. Those numbers show it is failing to capture the same online-advertising tail wind that is helping Google. By contrast, Google's first-quarter net income rose 60% from a year earlier to $592 million. U.S. online advertising generally rose 30% to $12.5 billion last year, according to the Interactive Advertising Bureau trade group and consulting firm PricewaterhouseCoopers.

    Microsoft executives also said they will need to boost investments in online businesses in the next fiscal year to levels far higher than Wall Street had expected. That prompted an 11% selloff of Microsoft shares Friday. The stock has ticked lower this week. In 4 p.m. Nasdaq Stock Market composite trading, shares fell 1.2% to $24.01, after hitting a 52-week low during the day of $23.90.

    At its core, the clash between Microsoft and Google centers on Microsoft's attempt to build up its We
  • by lord_rob the only on ( 859100 ) <shiva3003@@@gmail...com> on Wednesday May 03, 2006 @10:33AM (#15253722)
    If I remember correctly, Yahoo! search engine used Google technology.
    • Currently yes... no doubt that could change relatively easily if Yahoo was presented with a good enough reason.
    • If I remember correctly, Yahoo! search engine used Google technology.

      Yahoo used Google results for its searches between October 2002 & Feb 2004. They have used their own search engine (acquired with their purchase of Inktomi in 2003) ever since.

      Read all about it at Search Engine Watch [searchenginewatch.com]

      There's definitely a difference for some searches (and both are superior in my experience to MS's offering)
    • by sbrown123 ( 229895 ) on Wednesday May 03, 2006 @10:59AM (#15253957) Homepage
      Ignore the bullcrap you are hearing. Apparently there are a bunch of analysts out there who are pissed off that Google didn't acquire company X when they said they would. So, to keep their "insider" title they are releasing more steaming piles of wild guesses such as "eBay will join Microsoft" or "Amazon set to deal with Microsoft". One common line I am seeing is that they keep pointing to Microsoft to merge with someone else to do something about Google. The only thing I can guess is that these "insiders" probably have some Microsoft stock and are hating the recent decline due to Vista delays and advertisers flocking to Google. Screw em and don't pay these people mind.
      • Yep the analysts really don't like that Google isn't playing by their rules. Google is playing by the FCC rules but they are not doing the Wall Street dance. Frankly this seems more about power than about reality.
      • Heard a story about a stockbroker's meeting where they all made forecasts about where the market would be in a year.

        The clever veteran always took an extreme position, either that there would be a crash or that there would be a spectacular runup.

        He figured that nobody would remember a middle-of-the-road forecast but that if the market did crash (or zoom up) he'd get credit for being brilliant.
  • by sesshomaru ( 173381 ) on Wednesday May 03, 2006 @10:33AM (#15253723) Journal
    As Ash would say, "It's a Trick!!!" When Microsoft goes to companies and says, "Hey, why don't we make a strategic partnership against our common enemies?" they actually mean, "Hey, we'd like to steal your technology and run you out of business."

    Farewell, Yahoo! a flight of angels sing thee to thy rest!

    • That is how MS got ahold of a browser, and a DB. of course, they "borrow" heavily from the OSS world (check the libraries). I can no longer remember the company that used to do filesystem compression, but MS stole the tech; literally. No, the parent should be modded insightful.
    • Re:It's a Trick!!! (Score:3, Insightful)

      by killjoe ( 766577 )
      What's amazing to me is that people still actually cosider partnering up with MS. After all the partners they stabbed in the back you'd think people would wise up.
  • With apologies to all the Google fans out there, the Internet has changed the top search engine several times in the past and it will change it again.

    Just about every Internet veteran company has now recognized Google for the threat it is and has declared an all out war against them. Basically, it's Google against everyone. In such cases, everyone usually wins. Unfortunately for Google, they should expect many more actions like IE7 having a default search bar just like FireFox, only defaulting to point
    • by strider44 ( 650833 ) on Wednesday May 03, 2006 @10:50AM (#15253869)
      So what? Google's more than just a search engine - it's a huge advertising firm that just happens to create some neat software. A company as big as Google doesn't just die. Besides, I think that you're full of crap, not just because there'd be a huge antitrust spat if IE had a non-changable lock to msn search, but also because you don't MSN Search something, you Google it. That's not going to change anytime soon.
    • Apology accepted, please don't do it again.
    • hahahahaha - this is bigtallmofo's comment in 1986:
      With apologies to all the microsoft fans out there, the software industry has changed the preferred O/S vendor several times in the past and it will change it again.

      Just about every O/S company has now recognized microsoft for the threat it is and has declared an all out war against them. Basically, it's microsoft against everyone. In such cases, everyone usually wins. Unfortunately for microsoft, they should expect many more actions like IBM PC's being distributed with PC-DOS by default.

      Sorry, microsoft - it was fun while it lasted.
    • I tend to think of it as "Google and the little guys" against all of the "big guys". I think smaller companies and users tend to trust Google a lot more than they trust Microsoft or Yahoo, and going by each company's track record, it looks like they have reason to!

      I wouldn't underestimate the power of the little guys.
    • Poster obviously took "capitalism 101 " but skipped "capitalism 103".

      "Google" is no longer about technoligy it has become a brand name.

      A good brand name is an incredibly valuable thing. People pay 10* the cost
      for a pair of running shoes because it has a "Nike" logo, Detroit can
      produce a car just as good a Mercedes but it must sell them at half the price.

      Along with Apple and Amazon google is one of the few hi tech companies
      to make the transition to "trusted brand name".
      Microsoft is a recognised "brand" but n
    • With apologies to all the Google fans out there, the Internet has changed the top search engine several times in the past and it will change it again.

      Everything is temporary, but Google has a brand name that is pretty strong with the world.

      Compare Google to yahoo. Yahoo did not start as a "search engine" but rather as a directory or organization kind of thing. I've never found Yahoo as any kind of value to me personally, but like Google now, they are a hell of a brand name, and they have good enough real
    • Even though that's semi-trolly, I have to agree because Google has not improved its search to keep up with the Internet. A search on Google brings up blogs and forum discussions over more relevant sites, and link farms and adsense spammers fill the rest... I think Google may not want to change on purpose since improving search results means less AdWords revenue (why pay for an ad if my site comes up naturally?) and AdSense revenue (why fix the link farms when they bring in 50% of your revenue?).

      Truely uniq
    • Basically, it's Google against everyone. In such cases, everyone usually wins.

      "Everybody usually wins" huh? Well, everybody is fighting MS and they're still turning profits in the billions a year. Sure, it doesn't HAVE to last forever, but just because everybody sets their sights on the top player doesn't mean the top player is screwed. In fact, in business, many times lower companies are trying to achieve market dominance.

      Congratulations, you just observed the basic motivational drive behind businesses try
  • by cultrhetor ( 961872 ) on Wednesday May 03, 2006 @10:34AM (#15253732) Journal
    Does anyone else find it ironic that M$ is partnering with Yahoo! given the recent post concerning Yahoo's shady partnership with spyware companies, especially considering that IE's security holes are one of the reasons that spyware got so bad, so fast? A match made in heaven...
  • New Name (Score:5, Funny)

    by MikeMacK ( 788889 ) on Wednesday May 03, 2006 @10:34AM (#15253734)
    Yeah, they could call themselves Ya'soft - they could sell Viagra too.
  • Yahoo will loose.. (Score:3, Insightful)

    by Virtual Karma ( 862416 ) on Wednesday May 03, 2006 @10:40AM (#15253777) Homepage
    In this deal Yahoo will probably loose more than Microsoft will gain.
    • My thought exactly. What is Microsoft bringing to the table, other than cash (that I didn't know Yahoo was in dire need of). Yahoo should take a lesson from the HP/Compaq merger. Combining number 2 and 3 doesn't always make you number 1.
    • If Microsoft invested in Yahoo, that would be the final straw that motivated me to leave Yahoo completely. They have steadily gone downhill and adding Microsoft "services" would kill them for me.
  • That would be a major departure for Microsoft, the software maker that is legendary for toiling on its own until it captures a new market.

    I would have said that Microsoft is legendary for letting the market become somewhat stable, and then buying the best product therein. Visio, Groove, (OK, maybe not SQL Server). Did MS actually make PowerPoint from scratch?
  • by plopez ( 54068 ) on Wednesday May 03, 2006 @10:43AM (#15253801) Journal
    I think from Woody Allen (cue lame off topic Woody Allen jokes):
    "The lamb may lay down with the lion, but the lamb won't get much sleep at nights".

    Considering MSs history of screwing its partners, Yahoo would be insane to 'partner' with MS.
  • by Billosaur ( 927319 ) * <wgrotherNO@SPAMoptonline.net> on Wednesday May 03, 2006 @10:44AM (#15253806) Journal
    Two wild cards remain: Microsoft Chief Executive Steve Ballmer, who has historically shunned large acquisitions, and Yahoo co-founder Jerry Yang, whose support would be key to bringing the necessary Yahoo shareholders on board for a deal. Mr. Yang and others in Yahoo would be hard-pressed to sell to Microsoft, people close to the company say.

    I can't see this happening, precisely for this reason. Ballmer's ego wouldn't let him co-exist with Yahoo and Yang wouldn't be caught dead letting Ballmer in the building. Eventually it comes down to which one would flinch in a staring contest, but I suspect they'd both go blind before agreeing to work with the other.

  • by MarkusQ ( 450076 ) on Wednesday May 03, 2006 @10:45AM (#15253820) Journal

    That would be a major departure for Microsoft, the software maker that is legendary for toiling on its own until it captures a new market.

    Huh? This is just plain not true.

    1. Microsoft frequently "partners" with others (e.g. MSNBC). What they are famous for isn't refusing to partner, but rather turning on their partners and destroying them the moment it becomes to their advantage to do so.
    2. What new Markets has Microsoft captured exactly? IIRC, most of their attempts to go beyond their core competence have been costly failures.

    --MarkusQ

    • Ya, I caught that too. Legendary for toiling on their own?! What product do they have that they have completely developed by themselves? There could be one or two, but that definately doesn't make them "legendary" for doing their own work. When they were getting into the console market, I heard that they tried to buy Nintendo(wouldn't be surprised if it's true).

      Hell, the company was founded on the idea of ripping off other people's work.
    • > What new markets captured? XBoX? Palm? MSN? Haven't all these been late starts? And despite being mostly a MS basher, I think MS has captured significant market share in these domains.
    • by Anonymous Coward
      What new Markets has Microsoft captured exactly? IIRC, most of their attempts to go beyond their core competence have been costly failures.

      Hmmm, I'll take a stab at that: IDEs (Visual Studio is the standard - there is not even a close second), Office (ditto, the "competitors are so far in the rearview mirror it isn't funny), Browsers (85% market share - yah, I know, monopoly), Small Database Servers (>50% market share), Smartphones (leading and getting stronger), Handhelds (remember Palm?), XBOX (ok,

      • They are, as you mention, present in many markets. But that doesn't mean they are making money (and it's kind of silly to say you "captured" a market if it costs you more to be there than you're making).

        XBox, for example, just had it's first ever profitable quarter [theinquirer.net], but has a long way to go before it even pays back the money they invested in it, let alone give them a decend ROI. And (from the last time I looked through their annual report) I believe that to be the case for most of the other "successes"

  • by rkhalloran ( 136467 ) on Wednesday May 03, 2006 @10:48AM (#15253854) Homepage
    Even given this administration's please-bend-me-over attitude towards business, I can't imagine a deal of this sort wouldn't draw some attention from the DOJ. And with their EU counterparts already looking to drop a half-billion-Euro fine on MSFT, something like this would only encourage them to take a hard line.

    Then there's the problem that MS has traditionally managed to fsck up most companies they've partnered with, so why would Yahoo willingly get themselves into that situation?
  • by xxxJonBoyxxx ( 565205 ) on Wednesday May 03, 2006 @10:49AM (#15253865)
    "That would be a major departure for Microsoft, the software maker that is legendary for toiling on its own until it captures a new market. "

    Dunno if I buy that. See:

    http://dondodge.typepad.com/the_next_big_thing/200 5/10/microsoft_will_.html [typepad.com]
    "QDOS became MS-DOS, ForeThought became Powerpoint, SoftDesign became Microsoft Project, Vermeer became FrontPage, PlaceWare became Live Meeting, Vicinity became a key part of MapPoint, nCompass Labs became Content Management Server, Bungie Studios became Halo, HotMail, Visio, Great Plains, Groove Networks"

    Or...
    http://www.computerworld.com/softwaretopics/os/win dows/story/0,10801,78739,00.html [computerworld.com]
    http://www.microsoft.com/presspass/features/2005/m ar05/03-10GrooveQA.mspx [microsoft.com]
    http://www.networkworld.com/news/2005/021405-micro soft-sybari.html [networkworld.com]

    • by Otter ( 3800 ) on Wednesday May 03, 2006 @10:56AM (#15253930) Journal
      They buy, develop and market technologies; they don't typically buy established players for their market share. Hotmail and WebTV are the only two cases I can think of where Microsoft did that.
      • Visio and Great Plains were pretty well established, and Microsoft's failed big to buy Intuit is another example. Vermeer, on the other hand, is the perfect example of buying a technology with zero market presence.
      • I live on the fringes of the world of Microsoft but I seem to remember Visio (the company) were pretty successful before Microsoft bought the company. Also, my impression of the product was always one of tight integration with Windows and Office which suggested the companies had co-operated, but that is just my speculation.
    • Bungie Studios became Halo

      Hehe, uuuh, what ..? Did Autodesk become 3DSMax?

      That's some new form of language construct I'm not familiar with.
    • "QDOS became MS-DOS, ForeThought became Powerpoint, SoftDesign became Microsoft Project, Vermeer became FrontPage, PlaceWare became Live Meeting, Vicinity became a key part of MapPoint, nCompass Labs became Content Management Server, Bungie Studios became Halo, HotMail, Visio, Great Plains, Groove Networks"

      Wow, I didn't realize all of that. I know many of the Software titles, but haven't or don't use them, but I had no clue that they acquired most all of their products like that.

      To add onto the list there
  • It's not Dvorak...

    It's not Cringley...

    BEHOLD! There is a NEW troll of the internet, posting wild speculations and creating rumours! 'Ware, /.ers! He is on the loose, armed, and unknown!

  • I'm not sure how becoming bigger and adding inter-company politics to the already debilitating (for MSFT) itra-office politics will help them build search and advertising products that are better than Google's. In my completely naive opinion, I think each company would be better off throwing a handfull of their best people in a room and seeing what they can come up with when they can focus on technology.
  • Yikes ... most of Yahoo! runs on unix based servers. Many thousands of them, in fact. Imagine the chaos and ugliness that would ensue over there if Microsoft were to acquire them. They'd have to cut everything over to Windows, and it wouldn't be pretty. In fact, it would give Google an operational advantage over MicroHoo.
  • The Google fanboys will definitely disagree, but the monopoly over the search engine market is having a bad effect on Google lately.

    They have become more arrogant, bought their own lobbyists and, started growing by just buying a lot of smaller companies.

    I think a little healthy competition will do good to Google, just like it will do good to Microsoft (remember: IE7 exist largely because of Firefox).
  • Perhaps the googleplex mindshare is cognizant of
    that growing dichotomy (gotta use them beeg words)

    When will pure search be 10% of googles business?

    Is 'Everyone' nimble enough to catch all
    of the cool stuff sneaking out of googlelabs?

    Is google like the internet and will route around
    any blockages like Microsoft or Yahoo?

    We shall see...

  • wall street reply (Score:2, Insightful)

    by mapkinase ( 958129 )
    YHOO +10%
    GOOG - no change
  • Comment removed based on user account deletion
  • Need to find an alternative for my photos.
  • Why doesn't Microsoft focus on creating a better product and fight it out in the market place? They seem to be afraid to compete; they have to have full certainty of winning, no matter how they achieve it.

    I'd like them to compete instead, so all the companies have to keep trying to improve their products and people get to choose.
  • by psbrogna ( 611644 ) on Wednesday May 03, 2006 @11:19AM (#15254125)
    It was always my understanding that many of their pieces/parts have a non-MS lineage. For example: CPM begat MS-DOS, Mosaic begat IE, Sybase begat MS SQL, Hotmail begat... well, MS Hotmail. I've heard (unconfirmed) that their TCP/IP stack wasn't exactly home grown either.
  • %SUBJECT% is the real problem. Yahoo + MSN search isn't twice as good as each of those two alone. What makes Google a better search engine? That's what they have to find out--together, or each on their own. I'm constantly running queries against the Google competitors only to come back to Google to get the real answer. Not for trivial queries, but the interesting ones. I'd like to see better competitors because Google knows too much about everyone already.
  • Is it just me or others having ludicrous visuals of a these IT titans embroiled in a celebrity boxing match? Perhaps it's just the Chicken Littles that are embroiled.
  • A few days ago I installed Adobe Acrobat on a windows PC so I could RTFM.

    I was rather surpised to see the "Yahoo" toolbar appear on the IE browser
    next time I fired it up.

    I didnt ask for it, there were no "do you to install?" questions it just appeared. And it was a pig to get rid of.

    It wasn't my PC and I felt guilty about leaving it in a polluted state,
    and I have come to regard anything Yahoo as pollution.

    Isnt there some sort of law against this kind of stuff?
  • Why do people seem intent on pitching these companies against each other? Aren't they ALL making money? What's the matter - dividends are too small? Stock didn't ramp up 100% in 7 days? Didn't make a billion dollars overnight? These days, when people talk about a company "not growing" what they really mean is "I invested to ride the stock price rocket, damnit, not to wait and collect my share of the profits" - and I think this constant Micrsoft-killer, Google-killer kind of crap is related to that.
  • by NullProg ( 70833 ) on Wednesday May 03, 2006 @11:45AM (#15254328) Homepage Journal
    It seems that Steve and Bill have forgotten rules of acquisition. http://www.sjtrek.com/trek/rules/ [sjtrek.com]

    #52: Never ask when you can take.

    and

    #218: Always know what you're buying.

    Enjoy,
  • I could just as easily use M$ homepage as Yahoo's, but I don't as a matter of choice. And M$ has passport, what would that do to Yahoo?
  • by jafac ( 1449 ) on Wednesday May 03, 2006 @12:10PM (#15254559) Homepage
    If this is true, this represents a huge departure from Microsoft's previous M.O.

    Prior to this, they used to leverage their OS monopoly, and bundle "free" tools that would enbrace and extend standards in order to capture marketshare in new markets.

    Since they're not going to be able to do that any time in the near future (ie. Vista is delayed, and even when it does ship, it's not going to be widely adopted with any speed, due to hardware requirements, different operating paradigm, and evil DRM), they have to take a different approach.

    I find that very interesting. I wonder if it's true - and is this a voluntary change in tactics, or a necessary change due to reduced monopoly power?

  • I can't help but notic that the one thing not talked about in the article is technology.
    Batman and the Underpants Gnomes could join with Yahoo and MSN but if the technology doesn't offer an advantage over Google then they are all wasting their time.
  • Microsoft is very easily distracted, aren't they? A few years ago the big enemy was Linux. Now it's Google. I bet you could drive the price of shit through the roof by putting a Wired magazine in front of Bill Gates with a nice 4 page article on organic fertilizers.
    • Re:ADD (Score:2, Funny)

      I bet you could drive the price of shit through the roof by putting a Wired magazine in front of Bill Gates with a nice 4 page article on organic fertilizers.


      No, you've got it backwards! Microsoft would start offering shit for free, bundled with every copy of MS Windows!

      Oh, wait.... They already do.

  • Hmmmm (Score:2, Insightful)

    by BigLinuxGuy ( 241110 )
    I hope that Yahoo remembers how Sybase "profited" by their partnership with Microsoft. Microsoft got an enterprise-class RDBMS and Sybase got, well, ......

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