February 5th, 2008

What if Google Bid on Yahoo!?

Let’s try to hypothesize a scenario wherein Google tries to outbid Microsoft for online portal Yahoo! I think Yahoo! would take Google’s offer in a heartbeat, knowing that they are more culturally similar and both, in their own seemingly quirky ways, are pushing the limits of innovation on the web. Microsoft, on the other hand, stands to lose the only chance they have of carving a chunk out of the online advertising market that Google dominates. It will continue to make big bucks out of its software business, but all of that won’t mean anything when business, advertising, entertainment and should I say word processing are quickly shifting their gears to the Internet.

The main problem I see in a Microsoft-Yahoo! alliance is Microsoft will leave Yahoo! little to no autonomy. Microsoft needs Yahoo! so bad that I seriously doubt Microsoft will let Yahoo! move forward in a “business as usual” atmosphere. It’s going to be a dead-on arms race to beat Google, and the first order of business will revolve around just doing that. That entails major changes in strategy, business organization, massive layoffs, budget cuts and programmers forcedly ejected to Redmond. It won’t be a pretty sight. That’s the reality of hostile takeovers, but my inkling is Microsoft will use Yahoo! as its search engine brand rather than the other way around.

Google, on the other hand, has every right and reason to feel threatened. The US economy is reeling from the mortgage crisis and everyone is feeling the brunt of the not-yet-official recession. Google’s stock is falling, earnings grew lower than expected, not exactly the situation they want to be in right now in the face of the Microsoft bid. The numbers prove it too: Yahoo! is still the most popular website in the world, with Google coming in second and Microsoft third. A marriage between Yahoo! and Microsoft will leave Google out in the cold. Although their share in the search market combined are less than half of Google’s, we could not underestimate what these powerhouses are capable of. Microsoft has all the money Yahoo! needs to get its technology at par with Google, while Yahoo! has the traffic and talent Microsoft could only dream of.

Google is feeling a bit vulnerable . Judging from their official reaction, placing a bid on Yahoo! is out of the question, but still possible. Google may push for an “alliance”, although news of that barely made a dent on Yahoo!’s stock. In fact, it fell. Has the stock market spoken? Let’s wait and see.

Posted in Google, Yahoo!


  1. 6 Comments

  2. Eugene said...

    Google can’t bid on Yahoo! because it knows that it will immediately be rejected on antitrust concerns. Remember, Google’s takeover of Doubleclick was initially rejected in Europe because of ad monopoly concerns.

    It’s not exactly rosy for Microsoft-Yahoo! as well. I’m quite sure there will be tons of Flickr, Delicious, and other Yahoo! property users who will leave Yahoo! if they accept Microsoft’s offer.

    Feb 5, 2008

  3. Robert said...

    My emails falling into the hands of Microsoft will have me concerned about my privacy. Same if Google buys Yahoo. Leave Yahoo alone bitches!!

    Feb 5, 2008

  4. Andrew said...

    @Eugene: Honestly the idea of Y! falling into the laps of either M or G makes me feel queasy. G won’t make the mistake of bidding on Y! after the statement they made on their blog. They don’t want to be called hypocrites twice over.

    @Robert: Hiyeah, Bill Gates is the bitch.

    Feb 5, 2008

  5. marvin said...

    SOme great things that yahoo cannot surpass the capacity of google. they need more time to establish a well known name to both traditional internet users and undeground hacking society. google provides a great variety of sofwares that they called google apps like google earth, google search and “google hack” which is a very controversial move of google company

    Feb 6, 2008

  6. Andrew said...

    @Marvin: Hi Marvin! Y! has Yahoo! Maps, Yahoo! Search and hack days under its belt. And guess what, Microsoft does too. The thing is G is a decade ahead as far as search technology is concerned. M and Y has their work cut out for them.

    Feb 6, 2008

  7. Rosie said...

    Look at what MS is doing with its new entry into Exchange Online and SharePoint Online to its partners. For perspective look at the enlightening release by groupSPARK that offers a private branded version of those 2 products to resellers: http://www.emediawire.com/releases/exchange/online/prweb742904.htm. I think you are correct about how the MS/Yahoo alliance would work out.

    Mar 12, 2008

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