Posted May 5, 2008 8:48 am by with 8 comments

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With this weekend’s news that Microsoft has withdrawn its offer to purchase Yahoo, the news media is having a field day analyzing the “if,” “ands”, and “buts.” Instead of regurgitating the same stuff, let’s take a look at the winners and losers here.


  • Yahoo: It should have taken Microsoft’s increased offer. There were no other suitors in sight, and Google is hardly its best pick for a knight in shining armor. I don’t expect the market to be kind to Yahoo today, and I suspect employees are deflated, not elated.
  • Microsoft: When it made its bid for Yahoo, it waived a big white flag to the rest of us. Microsoft gave up on building its own search share and now it expects us to believe it can go back and waive a magic wand to fix it? If Microsoft had faith in its own ability to build Live Search’s share of internet searches, it wouldn’t have bid for Yahoo, would it?
  • Steve Ballmer: Last week, I speculated that the outcome of Microsoft’s bid would seal the fate of CEO Steve Ballmer. Unless Microsoft withdrew because it’s part of a plan to deflate Yahoo’s stock price, then strike again with a hostile takeover, consider Ballmer’s days at Microsoft numbered. There have been few success stories for Ballmer recently, and letting Yahoo get away, is his biggest defeat yet.
  • Employees: Employees at Microsoft and Yahoo are now left asking, “what now?” Sure, both CEO’s have circulated the obligatory “we can go on” rally-cry, but employees at both companies know they’re facing an uphill battle. At best, expect low morale. Worst case, a mass exodus of the top talent.
  • Consumers: Even though most of us love to use Google, we also kind of hoped to see a serious alternative search engine. We might still have used Google anyway, but some competition would have been good for the end-user.
  • Live Search: We already know that Microsoft is a loser in this battle, but the biggest loser is the Live Search brand. You just know that Microsofties would have loved to have switched their search brand to “Yahoo.” Instead, they’re stuck with a brand that will likely never become “top of mind” among search users. That’s a real shame, because, having just returned from Redmond, I can tell you they have the technology–just not the brand.


  • Google: Perhaps the biggest winner of all. Not only did its two largest rivals lose focus while trying to out-maneuver each other, but Yahoo, in desperation, threw itself at the feet of Google. Not only will both Yahoo and Microsoft lose market share from this power-struggle, but Google will grow, avoid the merger of two competitors, and likely earn all of the paid search business from Yahoo.
  • Jerry Yang: Since Yang’s return to the helm of Yahoo, he’s not exactly set the company on fire. However, even though he’s not saying so publicly, privately this is a huge victory for him. Sure, he still has to figure out how grow Yahoo’s revenues, but he’s earned some important battle-scars now–and the confidence of the company’s board.
  • Short Sellers: Anyone who sold Yahoo short, with the hopes the deal would fall through, will likely salivate at the sound of today’s opening bell on Wall Street.

What have I missed? Please leave a comment with your “Winners” and “Losers.”

  • There was an interesting study between IBM and MS. IBM lost out to the PC and had to reinvent themselves but they never really regained their number one position. Microsoft now is in the same position of commanding operating systems but the future is in web based applications. MS has to reinvent itself. Quite how they will do it with this one attempt down the drain, is worth watching.

    Nicole’s last blog post..Shoes, Shoes, and Then Some More Shoes

  • It would’ve been nice to have a focused Microhoo taking on Google, however it seems we are to be denied this….for the time being.

    Internet Entrepreneurs, hear this! Microsoft needs a n imaginative search solution to embrace and grow into a juggernaut!

  • Yeah that would have been an excellent return on investment selling those shares short. $37-$23 thats a wopper.

    Looking to see what Jerry Yang is going to do next.

  • Microsoft is still the biggest loser.

    Elections guy’s last blog post..Polls before Pennsylvania primary: Obama most popular

  • We don’t know when this story really end. Any probability might happen and change the position of the winners and loosers.

  • I agree with Elections guy, whilst Microsoft is on it’s downfall, merging with Yahoo! would have probably get them back on track.

  • Yeah its so easy for things to change, who knows what’s really happening behind closed doors.

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