(Apologies in advance if I go a little overboard. Oops, I think I already have.)
Back on the
Eastern front (oops, sorry, yesterday’s metaphor)—in the capital, Microsoft has sailed into the pending Google and Yahoo search ad deal during Senate hearings on the topic—and as we mentioned in today’s Picks, they’re making quite a splash in claiming that the Y/G deal would monopolize 90% of the search market. But come on, are they wrong?
But perhaps even more likely to take the wind out of the sales of Yahoo & Google’s honeymoon cruise is Yang’s own admission that this would be a near-monopoly. The story told by Microsoft General Counsel, Brad Smith, according to the LA Times:
On June 8, we met with Yahoo in San Jose, and Jerry Yang, the CEO of Yahoo, looked across the table, looked us in the eye and said, “Look, the search market today is basically a bipolar market.” He said, “On one pole there’s Google, and on the other pole there are Yahoo and Microsoft both competing with Google.” He said, “If we do this deal with Google, Yahoo will become part of Google’s pole.” And Microsoft, he said, would not be strong enough in this market to be a pole of its own.
As a reminder, these congressional hearings have nothing directly to do with the US government’s approval of the deal, which has to come from the Department of Justice. However, the DOJ would pretty much have to be deaf, dumb, blind and stupid (which theory I guess we do have a little evidence to support, but anyway) to completely ignore the sworn testimony from these hearings.
The hearings can also influence the DoJ, as the Times points out, by turning public opinion against the deal, putting pressure on the DoJ to withhold its approval. Google initially expected the deal to sail through, but it’s far from a done deal.
Another thing that might influence public opinion: reports that the Goohoo deal would increase Yahoo advertisers’ costs per click. MediaPost’s Tameka Kee reports on a SearchIgnite study released yesterday, stating that Yahoo’s CPCs could go up by as much as 22%, which is sure to be unpopular with the public (or at least this sector of the public!).
Meanwhile, Microsoft is also apparently still interested in the search-only deal Yahoo rejected this weekend (though neither can agree on which party was sailing under false colors—ie lying about the deal in this week’s publicity). Perhaps they think anchoring off Yahoo’s port bow and firing a few shots across the prow is the best way to coax them back to the negotiating table.
In the next port of call, there’s another suitor waiting with open arms—AOL. Yahoo was rumored to be in talks with AOL in February and again last week, but Microsoft was said to be turning to Time Warner as well. It looked as though everybody’s favorite sweetheart, however, was uninterested—until now.
Reuters reports that AOL is ready and waiting to accept a deal from either side:
Sources had said earlier that a deal with Yahoo would likely involve merging AOL with the Web pioneer, with Time Warner taking a minority stake in the combined company. A deal with Microsoft would likely be a sale of AOL, the sources said.
Reuters states that AOL is so popular because Yahoo and Microsoft see AOL as “potentially beneficial to leverage their positions in the Internet marketplace.” How, I’m not totally sure, since, despite Reuters’s assurances, there is no page two to this article. But page one does say that Yahoo thinks having AOL will make them look capable of sailing under their own power.
I know, I know, today’s metaphor was all wet. But give us an idea for a fun metaphor for the Microhoogle news that’s sure to come tomorrow and you could win an awesome prize*—your metaphor in the next Microhoogle post!
* Prizeiness and awesomeness of prize subject to subjectivity and available only where availability and legality permit.