In a move that oddly seemed to surprise many, Microsoft made an unsolicited bid for Yahoo! today. How much? – only $44.6 billion dollars. This would pay investors $31/share – a 62% premium over the previous day’s close.
Steve Ballmer is confident that this is the right move for Microsoft. He’s also confident that it’s the right move for Yahoo! But is he right?
Based on the discussed layoff of a thousand employees from Yahoo! (as well as their current financial slump) combined with Microsoft’s huge wallet, inability to get any solid foothold on the search market and control of the desktop and OS makes this an interesting notion. And it comes an an ironic time …
A couple days ago I completed a survey for SEOmoz (you can too at http://www.seomoz.org/seo-survey) and one of the questions was, “how (if anyone) can challenge Google”. My response was Microsoft based on 2 things; their control of the desktop and their ability to simply purchase Yahoo! which they pitched for last year. And it appears that it just *might* happen.
The combined exposure of these two engines would be roughly 33%, still only slightly past half of Google’s and there are other considerations. Yahoo! has a large hold on a variety of other properties that Microsoft would obviously leverage to increase their exposure and work to further monetize. Sites such as Flickr, MyBlogLog, etc. (these are my two favorites so that’s why they’re the ones listed
The down side, many people use Yahoo! as “the Google alternative”. If Yahoo! is combined with Microsoft it loses the appeal of being an alternative and becomes a cog in a bigger machine. Will users who’ve been loyal to Yahoo! leave? Also in my questions list: which algorithm will they lean towards? Will they keep all the Yahoo! properties or spin them off. What will happen to Yahoo!’s staff? (not that they have a ton of security right now anyways)
I have a different take than a lot of people I suppose, I like it and hope it goes through. As much as I like Google and appreciate their excellence – I’d like to see at least some kind of quasi-competition for search dominance. Heck, with a third of the market share when combined maybe I’ll here something other than (I don’t care about anyone else – I just want to rank on Google) from clients. If the deal goes through then my job gets a bit more interesting and to me, that’s a good thing.
Now I’m not an economist, nor can I predict the future. I’ve given a quick summary here of what it a HUGE issue and could change the search landscape dramatically. I highly recommend reading up on this further and keeping up with it as it progresses. To get you started, here are some great resources on the story thus far:
- CNN on the bid
- PC World writes about web users concerns over the deal
- CNET provides a great walk through on why Microsoft made the bid public this time rather than privately as they did last time (very interesting to learn a little bit about the tactics behind the offers and what we can expect to come)
And as a final note, I find it very funny that this deal is going to be reviewed by the anti-trust folks. How’s THAT for a waste of the tax payers dollars? Two companies merging so they can together be half of what the leader is. This is building competition not eliminating it. But it’ll probably cost a few million dollars for them to sort that out and come to the same conclusion.