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Why Microsoft Is Chasing Yahoo
latif writes "Microsoft has been chasing Yahoo for quite a while now. Most people think that it all started with Microsoft's acquisition bid for Yahoo, but this is not so. It is well-known that Microsoft and Yahoo have been negotiating since at least May of 2006, and may have been negotiating since 2003. I have done a thorough analysis utilizing information made public over the past five years and my analysis suggests that most people are completely wrong about what Microsoft wants from Yahoo."
Microsoft just wants to make their name really exciting. When they buy / merge with Yahoo! they can combine the names and all of a sudden "Microsoft" becomes, "Microsoft!" - the most exciting company ever! When that happens be on the look out for "Windows 7!"
You are using English. Please learn the difference between loose and lose; they're, there, and their; your and you're.
From the linked article: The Microsoft bid never made sense from a business perspective either. Yahoo has always had stale search offerings, second rate search technology, and a mediocre unmotivated workforce. Yahoo derives its value primarily from the massive web-traffic the company controls, but the cost of controlling this web-traffic is likely to be prohibitive for Microsoft
Second rate, stale, mediocre, unmotivated: sounds like a perfect fit for the Microsoft empire.
ARE there software companies that people actually like?! Google used to be up there, but they keep poking at the "do no evil" mantra. Every other software company I can think of has a core group of users that like the product, but those same folks also seem pretty ambivalent about the company.
It seems that the hardware companies get the love because you can touch the shiny. Examples: Tivo, Apple, Harley Davidson, Crispy Creme...
Sheldon
Comment removed based on user account deletion
They have to show revenue growth but it is impossible. What do they have without their monopoly? A lot of third rate code that no one wants. Between Vista and Open Office, they are showing revenue problems. Buying Yahoo makes it look like they can extend their monopoly to the web but it's Hotamail all over again. They are proving that they can spend even more money to be an also ran. At best they can crush and rob Yahoo, but that won't do anything to Google or anyone else who wants to run services with free software. The harder M$ tries, the more obvious it is that their game is over.
Once again a business method patent has stymied the development of a market. A bad idea that was obvious to everyone but lawyers and the courts for its ability to damage competition.
"In July 2001, the US patent office granted Overture US patent number 6,269,361. Also known as the '361 patent, it covered the basic paid-search bid-for-placement advertising model"
.. By simple elimination it has to be Google "
... :)
"In July 2003 Yahoo acquired Overture in a mostly stock deal valued at $1.63 billion"
"The peculiar thing about Microsoft Yahoo negotiations is Microsoft's insistence on owning/co-owning Yahoo's paid-search assets "
"Microsoft believes that by being clever about the deal terms Microsoft can practically get Yahoo's big fish patent licensee to fully reimburse Microsoft for whatever Microsoft pays for Yahoo's paid search assets"
"So, who is Yahoo's big fish patent licensee
--
So basically Microsoft gets Google to finance the Yahoo takeover and then gets Google to pay MS revenue out of its (GOOG) own paid search business.. PURR of EVIL
davecb5620@gmail.com
I concur with the most recent ancestor poster. I object to repeatedly tautologically redundant grandiloquence. I eschew such verbiage diligently. This very response shows you all that I am the very epitome of plain talking simple folk, scratch scratch, the very epitome of rustic linguistics.
sed -e 's/Chuck Norris/Rajnikant/g' joke > fact
Actually, it makes perfect sense.
I've been wondering why the Microsoft shills on this site have been the ones protesting the Yahoo/Google deal the most. Now it makes sense.
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We have never needed a good summary as much as this time!
Tsunami -- You can't bring a good wave down!
Once you remove the 'hidden material terms' part of the argument, the rest of it mostly falls apart. And I would be very surprised if Google had left themselves potentially open to a charge of fraud of this magnitude.
Up to that point, it was an interesting read.
Apple is a software company. The MacBook or iPhone you get with your copy of OSX is just part of the packaging.
If you mod me down, I shall become more powerful than you could possibly imagine.
If the Pope claps one hand on a tree, which falls over in the woods and lands on some bear scat, does anyone then refer to Google Bombs as Yahoo Bombs?
If you mod me down, I shall become more powerful than you could possibly imagine.
They could become "MicroHooHoo"!
Over-the-top Response Guy! Giving "Over-the-Top Responses" since 1970.
While I am aware that implementation doesn't have any real bearing on the task at hand, it does affect the culture. Yahoo makes use of open source technologies (as does Google.) Microsoft only uses Microsoft technologies. When they bought Hotmail (and subsequently turned it into a dump) they replaced the BSD boxes with Windows at a ratio of 1 to 5, (5x many windows boxen) in order to support the load.
Now Microsoft wants to buy search. Given that "search" is basically a text box that returns URLs, and Microsoft already has that capability, one has to look at what is the difference between MS and Yahoo? Why is Yahoo more valuable than Microsoft in paid search? Really, I don't know. But I can guess. Yahoo doesn't care if you're using Microsoft technologies. This has two sides - 1) you get equal support in FF and IE, 2) developers don't have to use Microsoft technologies. The "not invented here" does not apply. It's about getting a job done.
Buying Yahoo won't fix the problem if Yahoo is forced to change to the MS way. Obviously it's not worked for them.
I think MS is just buying time if they think they can do what they've always done. Clearly, the decision to buy yahoo search is the brain child of a business man with no appreciation of why things the way they are. If MS is going to buy Yahoo, then they have to admit defeat and not see it as acquiring static property to be added to a portfolio. They have to buy Yahoo then learn why they failed, or better learn why they failed first.
MS is rife with "not invented here" egoism: IE (Netscape), .Net (Java), SilverLight(Flash), Windows (BSD/Linux), and now Search. I can understand why a company should drink their own cool-aid, but when people start dropping, its time to change the formula.
Slashdot's rate-of-post filter: Preventing you from posting too many great ideas at once.
It only makes sense because Microsoft is floating upon an ocean of patent bubbles. The '361 patent is unenforceable in the real world. But it lets Microsoft get in on the Google paid search game, without possibly setting off a patent Armageddon war meltdown.
Microsoft's main revenue source (very expensive questionable quality software) is under serious threat. Google main revenue source is not under serious competitive threat. Google would get that '361 patent invalidated in a heart beat if it was a serious threat to their business. Microsoft, however, will not undertake the same tactic to get in on the paid search game, because business method patents are practically synonymous with software function patents.
Yahoo has nothing. It's no surprise corporate raiders would not take the bait. Any hidden asset value play of the '361 patent is an SCO disaster in waiting. But Yahoo is still in the game, has a chance down the line to be competitive against both Microsoft and Google.
Such navigation is what Bill Gates considered "good business skills". But MSFT can't afford to pay for the '361 patent chip, and Yahoo can't afford to sell it. And the '361 patent chip is completely worthless in the real world, but billions in stock valuations are being swung around because of it. Maybe Microsoft is just counting on the outcome that Google wouldn't press the patent nuclear war button also (as Microsoft would at least attempt to retaliate against all of Google's on-line services).
In the meantime, innovation and competition is stagnated, and consumers are worse off paying for lower quality products with higher prices -- ACROSS THE BOARD.
"From DNA to P2P, we are all Copycats now. Go Go Copycat Power! Copycat Powers activate! Form of, a Copycat." --monxrtr
Contradictory statements. If it's well-known that they've been negotiating since 2006, then (by definition) most people would know that.
"We can categorically state we have not released man-eating badgers into the area." - UK military spokesman, July 2007
Yooz furrnerz jes caint git it, kinya?
:)
Caveat Utilitor
Even with billions of dollars in the bank, 90% of the browsing population using IE, which forces people to MSN, MSN still has less than 1/2 the market of Yahoo, and not even twice the market share of AOL. This tends to indicate that MS has no clue how to direct users to content, but that they don't even know how to learn how to do such a thing. Basically, because MS cannot force MS Windows users to search with MSN, beyond what already exists in IE, and MS cannot undercut the prices of the product, as it did with XBox, MS is not succeeding in the search market. Those are it's two primary tools for success, and neither is suitable here.
The only option is go after Yahoo. There are two benefits to this, only one seems to be covered in the link. By far the most important is that the combined Yahoo/MS market share will be 35% This should help market ads. The downside risk is how many people will stop using Yahoo because of MS ownership, and the changes that the clearly incompetent MS staff(remember MSN only has 10%, that is for a reason) make to the service. This gives MS legitimacy in the marketplace.
The second, as implied by the link is that MS may be able to make trouble for google. This will result in what MS does best, funneling money from productive interests to fuel it's unproductive coffers, but will not likely affect Googles market share.
Here is why. Google is still innovating customer service. There are free apps on the web to do all sorts of stuff. They know their core business, bringing eyeballs to ads, and do what it takes to keep those eyeballs happy. Google is free to do whatever it takes. MS is not free to do whatever it takes. For instance, why is MS charging a subscription fee for MS Office. Why aren't they putting a Web version on MSN. Tell me how many people would create an MSN account and use it as their portal if they got to use even a limited version of MS word for free in the deal.
Why indeed. There are only two possible reasons. First, MS does not have the technology to do what Google is already doing. Second, the MS Office franchise, stale as it is, is still too valuable for MS to use to drive what is clear to become the future profit center for any large software concern. Again, MS looks back, everyone else looks forward. This is not bad, MS makes a lot of money on it, but it why MS can and does overpay for new tech(re: facebook), and why Yahoo is a deal that has to be done, even it eventually fails and means the end of Yahoo, and 80% market share for google.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
I'm an attorney tangentially involved in preparing SEC documents for a major corporation. Based on my experience with how seriously companies take their disclosure obligations, I would be shocked if Google were actively engaged in hiding a "material" settlement with Yahoo.
For what it's worth, materiality is a term of art -- and certainly any royalty paid by Google to Yahoo to settle a patent claim would almost certainly be material, likely and quantifiable -- which would likely trigger Google's obligation to disclose the potential liability in its 10-K and 10-Q.
Is it possible that Google is playing fast and loose with its securities obligations, or that it has come up with some novel legal theory about why it wouldn't be required to report such a deal? Well, sure. People and companies do stupid things all the time. But is it likely....?
Wow.... that's a really serious allegation to lodge without any "smoking gun". Interesting article, but I have to think there's an element of conspiracy theorism in it that does not sound credible to me.
He painted his room pink.
There's a lot of speculation here, but it's all just conjecture. There's definitely not any new facts in this article, and it is only "analysis" in the sense that it contains a much larger volume of speculation than most of the 1,000,897 other articles on the same subject. Obviously a new definition of the word, "analysis" of which I was not previously aware ...
I think MS's designs on Yahoo have to do not with search but with open technologies like YUI and popular sites like Flickr. With an acquisition of Yahoo, MS could kill YUI and various other open-source technologies, in a way that it has done before. (In the late 1990s they acquired Bay Area start-up DimensionX, who then made the Liquid Reality Java VRML toolkit. Liquid Reality was buried and the DimensionX developers were moved to MS's ActiveX division.)
Meanwhile, Flickr (the number 1 photo-sharing website by far) would fit into MS's standard-controlling strategy. Millions of users visit Flickr to share their content and see others' content. If all one's friends and photo-sharing communities are there, that's incentive to not jump ship to a rival site. If Flickr's AJAX/DHTML web site was replaced by a Silverlight application ("enhanced" with some Vista Aeroglass-style effects, of course), all these people would have to install Silverlight. Additionally, Microsoft could drive adoption of their Windows Media still-image standard as a replacement for JPEG, by recoding all the hosted images to WM format and serving it out only as such. All of a sudden, Silverlight is massively more popular, and WM is a major format for photographic still images.
Yahoo's messenger and MSN are two of the larger messengers and if MS locks them in together and then tries to tie those users into their other services then it might be a benefit along with MS actually having a search engine someone uses.
See, that is more along the lines of what I've been thinking also. I think that the search is a significant part of the deal, but not all of it by a long shot-more like icing on the cake.
Yahoo! has an interesting patent portfolio that may be a bigger target than just the search.
I also have to wonder if MS had anything to do with Carl Icahn stepping into the picture to 'stir the mud puddle' and help push Yahoo! towards MS.
It will be interesting to see how the dust settles on this one.
Down With Slashdot BETA!!! I've been around the corner and seen the oliphant; you can only abuse me from your perspecti
I won't speak for the rest of it, but there's a huge problem, IMHO, with these assertions:
1. Adobe could have an antitrust complaint against the purchase. - I just can't see what that would be. Anyone?
2. Buying Yahoo! does very much for Silverlight. How exactly? Silverlight is a threat to Flash by simply existing, because MS *already* has the great inertia of the incumbent monopolist. What has Webmail got to do with pushing Silverlight??
you had me at #!