Posted July 11, 2008 5:28 pm by with 25 comments

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I knew you were wondering, since none of us are sure these days, but Yahoo is still giving it the old college try. Here’s the latest from the Yahoo battlefront.

Although a few of our commentators insist that the Yahoo/Microsoft deal is all but inevitable, Rupert Murdoch disagrees. And I think he might know—after all, his properties, especially News Corp, have been courted by both sides almost since the beginning for support in brokering and/or funding a deal.

Murdoch said at the Allen & Co conference:

There won’t be a deal. There’s bad personal feelings. In six months, (Microsoft) will walk away.


Meanwhile, Jerry Yang tends to agree that a Microsoft deal is anything but a foregone conclusion—especially if the shareholders elect Icahn’s proxy board next month. In an interview with Boom Town’s Kara Swisher, Yang outlined his dark vision of his baby’s future with Icahn at the helm (emphasis added):

I think handing over the company to Carl Icahn for the express purpose of hoping he can negotiate a complex deal with Microsoft is a big mistake for shareholders. This is particularly true since Icahn has no plan B and therefore will have no leverage and will be dealing with Microsoft from a position of weakness.

Furthermore, Microsoft’s interest in Yahoo has been inconsistent at best and they refuse to even put a firm proposal on the table. Their motivations are suspect and there is simply no good reason to think they will actually show up at the end of the day.

And then what will shareholders be left with? A weakened, Icahn-controlled Yahoo.

Obviously, Yang has some reason to believe (and even hope) that things wouldn’t work out for Icahn and Microsoft—but what is Murdoch’s motivation in saying that there won’t be a deal?

And finally, another note that has been repeated in our comments: does any of it matter? Personally, I’d say yes and no. We’re watching the number two and three players in the search field expend much if not most of their energy in what looks like a battle to the death.

Just because MSFT and YHOO have around 30% of the search market together doesn’t necessarily mean that it would stay that way if they merged. And doubtlessly the continual fighting (followed by legal maneuvering for approval if a deal ever does get made) can only distract the management of these companies from their products and services—leaving the market wide open for Google.

Even though Google CEO Eric Schmidt thinks an independent Yahoo is best for the industry—and you know that means it’s suspect—I really haven’t seen a compelling reason that a Microsoft-owned Yahoo would do any better than they are now. Honestly, it seems like Microsoft’s leadership is even more clueless about search and giving them the #2 slot will only weaken both properties.

Bernard Lund at Read Write Web agrees—an independent Yahoo is not only important but beneficial to the industry (and he doesn’t run Yahoo’s biggest competitor). Lund also points out well that Yahoo may be #2 in search, but they dominate in other important areas (there are other areas?!), and it’s premature to discount them as a major player so greatly as to suggest that pairing with the declining, distant third would enhance their position.

What do you think—does Yahoo’s independence matter, and will they be able to keep it?

  • I personally thinnk that Yahoo should not go ahead with the dea. However money talks louder. And I think that they are just delaying something that is going to happen

  • I disagree – being taken over by argubly one of the most successful companies of all time should only be a good thing in investors’ eyes.

  • Rupert Murdoch, like all of us is fallible. Yahoo desperately needs to get its act together failing which it will go into oblivion soon enough. MS is the answer and for the sake of the company and its employees besides other stake holders, JY should swallow his pride and do the right thing.

    Nicole Price’s last blog post..Hair Care Products: Discounts and Deals

  • Ideally we wish that Yahoo succeeds on its own without being part of Microsoft. But then I dont have moneys invested so it is not as personal for me. Its the shareholders that should decide.

  • It would be perfect if Yahoo could sucessfully exist without Microsoft,but the money resolve everything

  • Hmm.

    I don’t know.

    Somehow the thought of MS and Yahoo together just doesn’t sit right with me. Some are saying MS/Yahoo could give the big G a run for their money.

    But I don’t know. MS owning the second biggest search engine?


    Michael Roberson’s last blog post..Driving traffic your site….on a budget

  • I agree that “Microhoo” would be disastrous. I think a merged search platform would drive many users over to Google. MSN hasn’t really caught on well, and the Yahoo platform and brand could be ruined.

  • While I can sympathize with Jerry, in trying to hold onto his baby, that’s always the risk you take when your a public company.

    Top Rated Digital’s last blog post..The Top 10 Digital Cameras Ripped Apart

  • If it was Yahoo’s platform and brand, backed by Microsoft financially rather than administratively, then I can’t see how they wouldn’t severely dent (if not usurp) Google’s market share.

  • I have a very hard time seeing regulators approve this, but I guess they might if allows them to rope in the Google monster.

  • MB, I hear what your saying, by it would be a good thing, if Yahoo was backed by Microsoft rather than joint with them (keeping yahoo as it is). That is an interesting idea.

  • Yahoo and Google are most competitor of Online marketing. If Google will buy yahoo, Google make monopoly on Hole market, It is not good to have market without competition.

  • And the saga continues…I also feel that an independent Yahoo, is preferential to the consumer, but well a capitalized Yahoo with some visionary people at the helm would be the ideal scenario.

  • Google is best. It`s leader now, and it will be leader in future.
    Yahoo, MSN and others are dying…

    Valdemarin’s last blog post..Долгожданная радость – мгновенное горе

  • I would like to see Yahoo catch up with Google, and give them a run for their money. If that did happen,then it would be good for the consumer to force more innovation within the search engines. I know that Google is far ahead with the search, however I would like to see Google offer a broader service like Yahoo and MSN.

  • nile…If they do buy Yahoo then yes they will have what appears to be a monopoly, but it’s more of a natural monopoly and it doesn’t mean that others still can’t compete. It would be totally different that lets say the alleged monopoly Microsoft has.

  • I think in the end Yahoo will surender to Microsoft bid. Hard to exist the competition without money.

  • If they keep the 2 platforms independent on the user-side (brands) and put together their money to get better search results then they could try to match the quality of googles Search engine. That would be good for the market.

  • I agree with Rupert Murdoch. Deals can happen only where there is no bad blood or bad feelings. There is too much of it here it seems. Life is more than just stock prices. Then again, it feels good to agree with a giant like RM.

  • Let us be real here. Yahoo has been losing its people. It desperately needs to get big bucks. Its stake holders other than JY are upset that their investments are going down in value. What other big rescue operation is possible?

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  • I believe that opening up your web is very important in order to get people to enable new products on top of your content.

  • i agree with Valdemarin but yahoo, msg and other aren’t dying , the google grow up faster every day

  • Messenger and yahoo mail services still rock. Its the search engine that’s dying for them

    Travel Point’s last blog post..The Samba of Brazil

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