February 01, 2008 | Friday
That £22.4 billion Microsoft bid for Yahoo
By Jackie Danicki - Blogger in Marketing |News |PPC |Search Engines |Ask |Google |Yahoo |Microsoft
Unless you’ve been living under a rock or taken a very early lunch somewhere outside of Soho, you’ll have heard about Microsoft’s bid for Yahoo. Here are some intial thoughts on the implications, as well as some big questions surrounding any attempted deal.
The practical points for UK marketers: The deal will deliver combined UK search market share of only 25 per cent, although both Yahoo and Microsoft have seen declining market share over time. The global picture is much rosier for them with regard to market share. If this deal actually goes through - and that means past regulators, too - it would be completed in the second half of the year. Even so, anticipate a lengthy period of integration. Impact on advertisers would be limited until next year.
A combined Yahoo and Microsoft would put Ask in third place - unless someone were to bid for them, too. With the kind of money being talked about with this deal, it seems any price on Ask would amount to relative chump change for the players involved.
Speaking of big money, Facebook matters here: If Google wants to hit back at Microsoft by bidding for Facebook, they are going to have to throw a substantial amount of money at it after Microsoft’s investment of $240 million based on a $15 billion valuation for the “social utility”. Talk about having Google where you want them (there are more crude ways to put that, but I’ll let you come up with them on your own).
So far, chatter about this deal is centred on combined numbers and engineering resource. Let’s not underestimate the challenge of cultural fit. After all, look what happened when Findwhat acquired Espotting to become MIVA.
One issue which may cause a cultural - and infrastructural - fissure is open source. Yahoo has invested significantly in open source code. Microsoft is, to put it mildly, not a member of the Church of Open Source. How would it reconcile this?
Cultural fit does extend to users, and specifically to the matters of trust and community. Many power users of Yahoo properties like Flickr, del.icio.us, and Upcoming are already vowing to jump ship if Microsoft takes over. These vows remind me of all the Americans who promised to flee to Canada if George Bush was re-elected in 2004. Let’s just say that exodus never happened, and I suspect user inertia may trump all here, too.
In the end, Microsoft may be about two years too late on this deal. Back then, Yahoo wasn’t as hobbled and Google wasn’t quite as strong as it is now. At this moment, the deal seems at least a little desperate on the part of both Microsoft and Yahoo, and this does give Google a certain amount of strength. A consolidation could backfire badly, making Google seem not so bad (or, in Google’s own terms, evil) compared to the amalgamation of two powerhouse technology and media companies.
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