Sunday, February 03, 2008


The news that Microsoft offered to buy Yahoo for $45 billion was a bit of a surprise at first. But after I thought about it for a while I came to a conclusion that this move wreaks of desperation on both sides. For Yahoo, which got passed by Google on its way to search engine supremacy a while back, this would be a bail out and a much needed influx of cash. Yahoo is in such need of cash that it recently announced possible job cuts. This decision is left entirely to the Yahoo co-founder and once again C.E.O. Jerry Yang. Yang became C.E.O. after the previous one stepped down following a somewhat disastrous run in that position. One of his major bonehead moves was not making an offer to buy Google, an idea that he actually pondered.

For Microsoft, which lost a recent Google lawsuit over desktop search dominance, this would be an influx of a much needed Internet presence since their own Internet offerings have been left in the dust by the two web-based megaliths, Google and Yahoo. Microsoft would also, quite possibly, be able to surpass Google with this acquisition because they would be able to bundle their operating systems with on-line services. The smarter move for Microsoft would be to make an offer to buy Google, but either the money isn't available or the current C.E.O. lacks imagination for such a huge move.

I am very curious to see if this deal would pass the appropriate regulators. Also, I am wondering what would the new entity be called: Microhoo or Yasoft. Either way this should be interesting.