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AOL Jumps Into the Ring with Microsoft, Yahoo!, Google
mikkl666 writes "Even just since this morning, there's much to report in the ongoing fight between Microsoft and Yahoo!. After Yahoo! announced yesterday that they are testing Google AdSense, Microsoft reacted with a comment pointing out that 'any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google's hands.' Ironically, they complain that 'this would make the market far less competitive.' Both companies try to team up with strong partners, as well. Yahoo! and AOL are now closing in on a deal to combine their Internet operations. And of course, this morning's news was that Rupert Murdoch's News Corp. is apparently in talks for a joint bid for Yahoo!"
AOL+Yahoo doesn't strike me as being able to produce better services than Yahoo alone could. Or MS+Yahoo. Or any other combination.
The bigger a company is, the more cultural inertia it has, the less willing it is to try something new. Would strapping AOL's "never change anything" mentality to any company make it better? At least Microsoft has occasionally given one of its subdivisions such free-reign that it's been able to innovate (Microsoft mice, xbox360's networking features). Still, MS is mostly extra baggage.
Yahoo by itself is already producing tons of different services, on the off-chance that a handful will be successful. Combining with someone larger will certainly slow that down. Would that slowdown be offset by making some more likely to be successful? I doubt it.
I'm inclined to agree with techdirt's analysis... this is an indication that the big players are taking their eyes off the ball. The more mergers/reshuffling/synergistic-focus-shifting that goes on among these companies, the more opportunity there is for an small, innovative and efficient company to step into the void.