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Our Take on the Microsoft Bid For Yahoo!
The big news this week of course is that Microsoft has unveiled a bid to buy Yahoo! for $31 per share in cash and stock. That equates to a $44.6 billion offer. As most industry analysts and pundits quickly realized, this is basically Microsoft’s latest attempt to try and stack up in the search market vs. Google.
Microsoft has tried repeatedly to build, rebuild and optimize the various incarnations of their own search engine product and its associated pay per click market tools. To date, in my opinion, they haven’t come close to being successful and remain the third tier player after Google and Yahoo! in the lucrative paid search engine advertising market. So it makes a lot of sense that they would buy the number two player to combine forces and get a bigger piece of the market.
However, beyond just search, Yahoo! also has massively trafficked and advertised upon content properties like Yahoo! News and Yahoo! Finance. So they bring more to Microsoft’s table than just search, they are also a major competitor to the MSN content network.
But, in my mind the underlying theme in this potential transaction is that Microsoft seems to be saying “I give up” in trying to compete with Google on its own. By buying Yahoo! they can get a jump start in the right direction and get away from the “software company” stigma. As Google continues to build out web-based (and FREE) tools and applications for the enterprise (which we use here at Accession Media and love), Microsoft needs to remain relevant in this reshaped market - buying Yahoo! could be a big help.
Of course, since this announcement the big question to Google has been “are you scared?” I’ve seen at least two interviews with high ranking Google execs where they were polite - but you could tell they were holding back laughter. My feeling is that, if Microsoft does pull off this purchase, and THEN manages not to totally screw up Yahoo!, the combined entity will still just be second best in the paid search market. A little closer to Google, granted, but still second best.
