Emerging Tech

The top five shots fired as Microsoft-Yahoo deal turns into war

The Microsoft-Yahoo deal has officially descended into war, with a major shots now being fired by both camps. Here's a look at the top five bombshells that could soon tip the deal one way or another.

As the Microsoft-Yahoo officially descends into war, one thing is now very clear: Yahoo executives will do almost anything to avoid having to go down the aisle with the world's biggest software company.

After Microsoft CEO Steve Ballmer publicly threatened Yahoo with a hostile takeover over the weekend and then Yahoo CEO Jerry Yang fired back on Monday morning saying that Microsoft's current offer was "not in the best interests of Yahoo and our stockholders," things reached a fevered pitch yesterday with both sides making major moves to bring this courting to an end.

Here's a look at the top five bombshells -- in the past 24 hours -- that could soon tip the deal one way or another.

Yahoo ad deal with Google

Google has meddled in this deal before and with things moving toward a crescendo Yahoo and Google finally agreed to a test that could grow into a larger deal. Yahoo will place Google AdSense ads on about 3% of its search results pages. This could turn into a big short-term revenue gain for Yahoo, but it calls into question the millions they recently spent on their own competing search ad platform ("Panama") and it limits Yahoo's long-term potential for revenue growth. But, basically, if Yahoo is going to be relegated to becoming a lap dog, it would rather be Google's lap dog than Microsoft's.

Yahoo in talks to merge with AOL

Yahoo has re-engaged Time Warner about doing a deal to combine the Internet assets and operations of Yahoo and AOL (which Time Warner would love to unload). This deal would ultimately have to be combined with a Google AdSense to make sense economically. That's not a stretch since AOL already has a similar deal with Google. While AOL has some strong assets -- especially is nascent ad network -- it has frankly been in a nosedive for years, and trying to turn it around while Yahoo also deals with its own internal problems sounds like a scenario for disaster.

Microsoft in talks with News Corp to make joint bid

News Corp. was originally one of the suitors that Yahoo approached to fight off the Microsoft deal and Rupert Murdoch was interested in giving MySpace to Yahoo to run in return for a nice stake in Yahoo. Murdoch eventually decided that outbidding Microsoft wasn't possible so it walked away from table. However, The Wall Street Journal has reported that Microsoft and News Corp. are now in talks to put together a joint offer. This would likely involve MySpace -- which has probably reached its peak value or is just past it, as Larry Dignan noted -- and some cash from Murdoch to raise the price of the deal. This sounds like a trump card for Microsoft to use to increase the value of its offer to beat any deals that Yahoo negotiates.

Legg Mason says it will support an independent Yahoo

Ballmer's threat to lower Microsoft's offer and proceed with a hostile takeover if Yahoo did not come to the table to finalize a deal by April 26 was not well received by Yahoo shareholders. In fact, it led one of Yahoo's major shareholders, Legg Mason, to say that it would support Yahoo's move to remain independent if Microsoft lowered its offer.

Microsoft lawyer raises anti-trust flag on Yahoo-Google deal

As reported by News.com this morning, Microsoft general counsel Brad Smith stated, "Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search-advertising market in Google's hands. This would make the market far less competitive, in contrast to our own proposal to acquire Yahoo." That's code for: We will pursue anti-trust litigation with the U.S. government if Yahoo tries to kill our takeover bid by selling its search traffic to Google.

About

Jason Hiner is the Global Editor in Chief of TechRepublic and Global Long Form Editor of ZDNet. He is an award-winning journalist who writes about the people, products, and ideas that are revolutionizing the ways we live and work in the 21st century.

31 comments
denver_neri
denver_neri

I THINK ITS TIME FOR A NEW COMPANY WILL EMERGE TO BATTLE AGAINST THESE COMPANIES. FASTEN YOUR SETBELTS FOR HOSTILE TAKEOVER.

hero_tsai
hero_tsai

Maybe I am being too far away from the mainstream but I see something very different. I see this as an attempt to make the giant fall due to being too large and heavy. I personally think that if google is actually trapped into making a move, it will be the beginning of its fall.

BALTHOR
BALTHOR

I think that they are not kidding when they say Violent Takeover.This could even be a dog and pony show for the Pope.

omgwtfddr
omgwtfddr

I think it is quite ironic that Microsoft would raise the anti-trust flag when they were just in the process of being tried for violating the Sherman anti-trust act. A bit hyppocritical. Although a do have to agree that this situation HAS happened before with Netscape twelve years ago. With the software giant known as Microsoft breathing down Yahoo's neck, I wonder if Yahoo can really come out on top.....

NotSoChiGuy
NotSoChiGuy

....meet Mr. Kettle: ???Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search-advertising market in Google???s hands. This would make the market far less competitive, in contrast to our own proposal to acquire Yahoo.??? I had to double-check my calendar to make sure it was 4/10, and not 4/1. That's taking unintentional comedy to new heights!!

ihfwt
ihfwt

I'm ok with whatever deal goes down so long as the Internet remains competitive and not Google centric.

wirejockey
wirejockey

Google is and will ultimately marginalize MS in this space, and Yahoo is on a path of slow death. Has been for sometime. BTW, if MS does acquire Yahoo, then IMO it (Yahoo) dies quicker.

Stelian
Stelian

... or any other-than-Google search engine , for that matter? The only gain for Google in a Yahoo takeover would be to screw Microsoft.

Smart_Neuron
Smart_Neuron

There's no war. Microsoft will just buy what it likes! Simple.

martian
martian

Or you could "lose" it... I don't know how you'd do what you said. Wear looser pants. (not to be confused with the ever popular loser pants)

nriddle
nriddle

imho, google is the center and like someone posted already, when/if MS takes yahoo over...it will be a faster end to yahoo

jasonhiner
jasonhiner

Now, Google has done a lot more than Netscape ever did. However, I wouldn't count out Microsoft yet. The combination of Microsoft and Yahoo have a lot of users online. They won't beat Google in search, but together they could get a major leg up in online applications, which will undermine Google's larger plans and create a major revenue stream for online ads.

BOUND4DOOM
BOUND4DOOM

This is really of no concern to me. I am a Microsoft fan as far as developer technologies, databases, even servers. On the web though Google owns it. I Tried Microsoft's Domains.live.com for hosting of apps and mail and so on for your domain. I eventually moved back with Google's. They just go the extra mile to make it work with everything and make it easy for people to use. Take email for example. Microsoft couldn't even make their own live email work with outlook. Google, just set it up for smtp or imap and have at it. Even sync up calendars and share them. Google scares me though I keep waiting on a bomb to drop or something. Microsoft tries to force you to go to its sites. Where Google you want to go. Yahoo, well I haven't paid them any attention in years. So if Microsoft does get them, it will not matter much to me.

flavanoone
flavanoone

Yup I got same point of view as wirejockey. Google already marginalized Micro in search engine and ads buisness. Thats cool because Micro already marginalized others companies in software. So we got balance. Theres no war just hard negotiations to provoke big shareholders to do some noise and someone will make much money on this "War". My advice Yahoo to pick Google and live longer. Maybe friendship between them hehe

jack
jack

Like I said, I couldn't have said it better.

SObaldrick
SObaldrick

my first choice search engine every time .. but that could be changing soon i guess. Les.

Larry the Security Guy
Larry the Security Guy

I use Yahoo as a secondary search engine under Google. I also use Yahoo groups for its mailing list-like features. Those will be re-evaluated if MS does end up purchasing Yahoo. I prefer not to do business with MS.

Markfireeye
Markfireeye

Yes for mail but will move to Gmail is MS take yahoo..

The Scummy One
The Scummy One

especially since it gives 'hints' while I am typing, so I dont have to type it fully, or if I do not know the spelling, or other. Tis a good feature. I have better results from Google often, but sometimes Yahoo gives better. But they both seem to work fine for me.

JimInPA
JimInPA

I use Live sometimes when I don't find what I am looking for on Google. I don't use Yahoo's engine although I subscribe to some of thier other services. I truely believe that if it were any other company trying to take over for that price Yahoo would jump at it.

photocrimes
photocrimes

Microsoft seems to have a knack for buying companies as they are sliding into obscurity. Yahoo may of been hot a few years ago, and it's still not bad now, but it's on the down slide. I think Microsoft will win the buying war. They will waste tons of money on Yahoo. They think they will increase their search and ad share but they will kill Yahoo just like they did Hotmail. It will end up just as insignificant and the share holders will lose more money. Actually, I think this whole desperate grab at Yahoo just shows how bad things are at Microsoft.

chriss
chriss

I have been using Y!mail for nearly a decade and it has accumulated quite a bit of info especially when it went unlimited. not to mention all the contacts, notes, etc plus groups and other features... either way this goes I do not see Yahoo lasting very long afterwards and so it is time to pull up stakes and find a new home... as for which side I prefer?... as much as I loathe M$ I hope they get yahoo so that Google can get back to doing useful things like prepping for the new vistas the internet will be exploring in the next few years (new wireless devices/services) and keeping things open for development by the many instead of the few...

svasani
svasani

I seriously do. Yahoo has always been my email of choice. From time to time, Yahoo took steps to keep Y! mail on top; revised mail search, mail quota, auto-complete contacts. How about Games? Have you played Y!Pool? Yahoo rocks. Also, their online content beats anybody. I have seen more movie trailers through Yahoo than any other site just because of the way they present it. Its just the flow of its services from one page to other. Super Cool. I Love Microsoft too. But their online services suck big time. Bottomline: I love Microsoft and I love Yahoo. But I am not sure if I would love Yike!rosoft.

Timbo Zimbabwe
Timbo Zimbabwe

?Any definitive agreement between Yahoo and Google would consolidate over 90 percent of the search-advertising market in Google?s hands. This would make the market far less competitive, in contrast to our own proposal to acquire Yahoo.? Considering that Microsoft is in the browser business, I'd be more leary about their control of Yahoo than Google's control of it.

jspurbeck
jspurbeck

In some way, they will gobble up yahoo. A wider mix, ala, MS-NewsCorp-Yahoo-MySpace, does sound alarms, but, with Yahoo alone, what does MS get? 1. A decent search engine (under the hoods). 2. A brand, "Yahoo!" (not sure of the value). 3. Back-end tools to manage adblivion ;). 4. Some of the advertiser clients. 5. A chance to remake themselves by acquisition. 6. Some pretty mad stockholders. 7. Some very mad off staffers. 8. A caravan of buses of extremely mad Yahoo developers! 9. A truckload of publicity, all seemingly negative. 10. A Stronger Google.

Timbo Zimbabwe
Timbo Zimbabwe

... Microsoft controlling Yahoo than Google. With MS Internet Explorer, can you imagine how MS would abuse that as they have nearly everything else they've done?

rafaelm
rafaelm

Yeah, I thought it was funny that M$ was complaining about anti-trust issues

nriddle
nriddle

Granted I only checked the Alexa site BUT here are the flaws in the statistics and clarification of what I meant. 1- Measuring ALL traffic to www.yahoo.com and www.google.com, rather than search traffic (which is what I was refering too) 2- Yahoo and Google offer different functions and all things considered Alexa doesnt show which parts of the sites are getting the most traffic/usage. 3- I had one more, but I got interuppted.

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