United They Can Do Something Better

Author: Jimmy

3 Feb

Everyone talks about Microsoft’s $45 billion offer for Yahoo these days and, on the other hand, it is seen by many here as just what is needed to repel another monopolist in the making: Google.

MicroHoo!

“We would prefer to see a healthy Microsoft and Yahoo,” says Geoff Yang, a venture capitalist with Redpoint Ventures and an early investor in Internet-based companies. “But I am starting to get worried about Google’s dominance, and in the absence of three healthy companies, I’ll take two. Competition is good for us, the industry and customers.”

By themselves, neither Microsoft nor Yahoo have shown an ability to stop the Google onslaught, but united they might have the heft to pull it off. You all know that search remains the Web’s best business where the largest part of ad dollars are spent, and Google controls more than 60% of it. Together, Microsoft and Yahoo will own almost 30%. If they can cling to it that’s enough to be a significant competitor.

Although Yahoo may never catch up Google in search, Yahoo can still follow portal strategy and in combination with Microsoft they will be able to put their properties in front of everyone who has a computer.

To Microsoft, they can merge a wide range of Yahoo’s web apps into their existing ones, but it is more likely that products from Yahoo, a company built for the online platform, will be the ones to win over.

“In some respects, Microsoft buying Yahoo removes a potential competitor in the online services and online advertising space,” said AR Communications’ Carmi Levy. “But at the same time — and I think more importantly, because otherwise Microsoft wouldn’t be bidding this amount [$44.6 billion] for this company — Microsoft sees this as its only opportunity to leap-frog, or at least play catch up with, Google. If it continues to try to build out a services strategy and a services portfolio on its own, and tries to convert those services into viable long-term advertising based revenue, then it will not be able to do so as effectively or as quickly or as thoroughly.”

In reality, the Wall Street Journal is quoting unnamed Yahoo officials as saying Microsoft gave them only 48 hours to respond to Ballmer’s offer. So, we are supposed to get Yahoo’s answer very soon. Anyway, one thing for sure, combined they can do something better than divided, and to certain degree, we can hope for a more competitive Internet.

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