The controversial issue about the bid that Microsoft places on Yahoo has sparked my interest to start a blog with this topic. Thanks to my friend, Salim, who has given me a few constructive idea on this area =)
On 1st February 2008, Microsoft has announced that it has made a proposal to acquire Yahoo! for $31 per share, which add up to a total equity value of approximately $44.6 billion. Yahoo! concluded that it is not their best interest of all as they believe that Microsoft’s offer undervalues Yahoo! global brand, large wide audiences etc. In February last year, Yahoo! already informed Microsoft that it was not for sale but would look for a way to cooperate to fight with Google. Microsoft’s proposal of the acquisition of Yahoo last month is said to be breaking its promise.
Having said that, Microsoft seems to stand firm to the decision and persistent on the proposal until today. 5 days ago, The Times has learned that Microsoft is going to aim for coup if Yahoo! fails to start serious talks or accept the bid within a week. According to the rules that govern the way in which Yahoo! is set up, any shareholder can nominate directors before the annual meeting. The deadline for this nominations is March 14. If Microsoft’s nomination is successful, the appointment will be made effective right away.
Regarding the combination of Microsoft and Yahoo issue, Google seems to be very concerned about the future of the Internet should the companies merge. David Drummond, chief legal officer of Google believes that the acquisition is not just about financial transaction, it is about preserving the underlying principles of the Internet: openess and innovation. Google raises the question on whether the PC software company will unfairly limit the ability of consumers to freely access competitor’s email, IM, and web-based services. Google also is borrowing a page from Microsoft’s book by urging antitrust regulators to take a hard look at the proposed marriage between its two rivals. Google is trying every way to delay the its approval as long as possible in order to have more time to draw a plan to counteract the acquisition.
Microsoft is eager and anxious to take control of Yahoo! because Google is dominating in today’s Internet scene. Microsoft wants to dominate the online advertising market which is going to double its size in 2 years time. The Google’s DoubleClick purchase was seen as a blow to Microsoft, which was also said to be considering an acquisition of DoubleClick. Apart from that, Google Doc is threathening the existance of Microsft Office. Google Doc allows the creation of documents, spreadsheets, as well as presentations online. The best thing about it is that it allows anyone you’ve invited to share and collaborate it in real time as soon as they have signed in. There is no need to worry about the failure of hard drive or power failure as it uses online storage and auto-save.
Microsoft and Google are already debating pros and cons regarding the proposals while Yahoo! has very little to say until now. It is known that Google has started offering whatever help they can to stop Yahoo! from being swallowed by Microsoft. It seems that Yahoo! wanted to restart a merger talk with AOL, the Internet arm of Time Warner, but it is understood that AOL is not interested. Yahoo! has also started talks with News Corporation, the parent company of The Times, over a possible joint venture that would involve merging News Corp’s My Space social networking business into Yahoo! in return for a large shareholding. The talks are believed to be continuing.
The question is: Which combination that you think is the most competitive, most likely to create real value? Microsoft has the resources to pay for the development of the business whereas Yahoo has the global brand name and the wide Internet audiences. It will have the second-largest ad network and a vast array of sites on which to place its own ads.
Yahoo’s strong point is that it understand how to bring poeple together to have fun but its search engine has always not been competent enough to compete with Google’s. With Google as a potential business partner, Yahoo can merge its email into Gmail and concentrate on the enhancement of its social applications such as Yahoo! Groups, Flickr etc.
Google has a clearly dominant position in Internet searching whereas Microsoft as a search competitor could change the market’s assessment of Google’s value. If Microsoft attempts to integrate Web search features directly into its coming Longhorn operating system, it could restart the bitter feud that led to the government antitrust case that grew out of Netscape’s failure.
What do you think?
Ravings about Technology 