Microsoft’s move on Yahoo won’t succeed
By Chris Green in Editorial
Posted in advertising, Mergers and Acquisitions, yahoo, google, microsoft on
Rated: 90% (4 votes)
Loading ...Comment by Simon Bisson & Mary Branscombe - February 1, 2008 on 8:40 pm
I’m not so sure that it’ll be thrown out. While Microsoft may have a monopoly in desktop operating systems, it and Yahoo! most definitely don’t in search and portals (and the two together would still have a smaller market share than Google…)
Portals are dead anyway, the numbers show that sites like the Firefox Google search page and Web 2.0 social networking sites are rapidly becoming more popular than them…
Microsoft needs Yahoo! as a backdrop to Live, much like Apple has .Mac as a backend to the iApps. In fact Microsoft is already using Yahoo! services with the Live desktop apps…
Comment by dennish - February 2, 2008 on 12:28 pm
Nah - no competitive issues here. the implied point about integration is well made but there is much more at stake here. Advertising was the key word throughout Ballmmer’s schpiel but what they didn’t talk about but which McAndrew did in a memo from the previous day was alternative monetization possibilities. Not.just.search.
Also, remember Yahoo! is a massive content provider. Could fit well with enterprise part of the business.
Comment by Computer Consultants Kit - February 7, 2008 on 2:01 pm
Chris,
I like your contrarian analysis. Way too many journalists just blogged the exact-same party-line.
What do you think of Google’s move earlier this week to raise anti-trust concerns?
Or the prospect of Google “partnering” with Yahoo?
Joshua Feinberg
Comment by Chris Green - February 7, 2008 on 9:30 pm
A Google/Yahoo collaboration has merit - better the devil you know etc.
It is also in Google’s interest to maintain Yahoo in its current form, thus maintaining diatance between itself and Microsoft, and providing a worthy obstacle for Microsoft’s online ambitions.
The challenge for Google, should anything come of these discussions, is whether it can craft a relationship with Yahoo that does not compromise either company’s business offering, and with it providing Microsoft with the opportunity to accuse both of operating an illegal cartel.
There is a clear antitrust arguement in relation to Microsoft’s move on Yahoo. The former buying the latter will reduce choice, not so much for consumers but for companies trying to advertise online. Microsoft swallowing Yahoo reduces the outlets for big online advertisers and gives both Google and Microsoft the ability to raise prices as a direct by-product of the reduced alternative options.
The situation is similar to the merger of Granada and Carlton, the two big terrestrial commercial broadcasters in the UK. That deal ws allowed to go through, but only after regulators imposed price controls on how much the enlarged business could sell ad slots on its main TV channel for.
The same solution could solve the same problem for MS/Yahoo. But these are two far bigger companies and the ad spend in question dwarfs the money involved in the Carlton/Granada situation. Capping what a post-Yahoo Microsoft could charge advertisers for carrying and placing ad traffic would undermine and devalue the Yahoo acquisition to the point of making it uneconomical to buy in the first place. It also fails to address the minority issue of preserving consumer choice and competing services such as IM, photo hosting, webmail and search engines.
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