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Was the Yahoo-Google Deal a Ploy To Weaken Yahoo?
JagsLive writes with a link to a BetaNews story about a US Senator who is questioning whether the deal between Yahoo and Google was brokered with less than honorable intentions on Google's part. The advertising deal came under scrutiny from the Department of Justice recently for potential antitrust violations. The deal has now been delayed in order to allow investigators more time for evaluation. Meanwhile, rumors are circulating that Yahoo will cut as much as 20% of its workforce after an internal memo from CEO Jerry Yang called for "discipline" and said the company was "getting fit" for the long term. For their part, Google has launched a site endorsing the deal and attempting to smooth the way for its approval by providing facts and positive reactions from experts.
Notice how the DOJ only moves on anti-trust issues when the complaint is from a big corp (Microsoft).
Honestly.
:: There is no light at the end of a tunnel. There is a tunnel after a tunnel : Thom Y.
Feigned buyout intentions are used occasionally by unscrupulous business folks to damage competition. Here's a scenario used often (short version):
Potential buyer walk up to a company and says they would like to purchase it. The seller, who is interested says sure. After long negotiations, the buyer starts making demands for the deal to go through, such as: firing key employees because they "don't fit in the new company", canning key suppliers or not paying them on time to make the cash situation better, announcing to customers that there's a transaction going on, and other things to fuck up the company so that they will buy it - only under those conditions. Then, the buyer walks away. The seller is now pretty much fucked. It doesn't sound like anyone would fall for this, but after slow, very slow, negotiations for a while, and a strong desire by the seller to sell, it happens ever so slowly and after a while, the seller is afraid to bail because he's so far down the road, he keeps going along with the hopes of finishing.
BTW, not everyone can do this. You have to actually be someone who has the resources to do this. You or I walking up to a business, no matter how small, without any track record or business history will be ignored. It's usually done by competitors who want to knock out the competition. So, don't think you can wipe out the guy who screwed you on your WoW special edition throne.
On the one hand, I find the idea that running Google ads might be a really bad idea, in the strategic sense, for Yahoo unsurprising and certainly plausible enough. It might be that Yahoo would actually make more money as a receptacle for Google ads than they would by running the same ads themselves; but that certainly isn't a vote of confidence in Yahoo's own advertising mechanism. Were Yahoo to accept such an offer, it would certainly suggest that the niche they think they can compete in is declining.
On the other hand, nowhere in the story do I get any explanation of where "bad faith" and "less than honorable intentions" come in. Google's offer to run advertising on other people's web properties, in exchange for money, is common, not substantially different from similar schemes from others, and just not all that devious. Yahoo might well be stupid to take the deal, I don't know; but I don't understand how the offer is underhanded.
Captain Obvious to the rescue! Somebody quickly tell Yahoo, they must have overlooked this possibility when selling their adspace to Google!
MS spend tend of millions lobbying against this. They'll get something for their (considerable) money.
Need Mercedes parts ?
Yes.
No
WOW, MS has loads of friends in lots of low places.
I prefer the "u" in honour as it seems to be missing these days.
total filth.
department of justice, the department which has had its all applicants and candidates for positions of power 'screened' by a bitch of bush administration, who later admitted to screening candidates more than FORTY times in regard to their political views, BY 'MISTAKE'. a mistake that has been done forty times.
department of justice is a joke, and is a puppet at the hands of bush administration and whichever big buck corporation that supports it. yea, you got my meaning.
Read radical news here
Google competitor Microsoft in the mean-time came up with a plan that's so crazy it just might work. Instead of buying Yahoo to beat Google, they will pay people in the US $1 million per year to not use Google. A special program will monitor their web activitiy to ensure this. Danny Sullivan comments, "Absurdly expensive? It can seem that way at first, but consider the math. There's an estimated 300 million people living in the United States. If you pay each one $1 million for the next three years, thatâ(TM)s just under $1 billion. That saves Microsoft $39 billion compared to what it was going to spend on purchasing Yahoo."
Heroes die once, cowards live longer.
That really doesn't make much sense. Consider this:
- Yahoo tested Google's AdSense instead of their own ad system a while ago.
- Then they switched to AdSense.
Obviously, this means that the cut they got from AdSense was higher than what they got from their own ad system, because Google's ads are better/better targeted/people pay more for AdSense/whatever other reason.
Equally obviously, the people who run Yahoo's ad system aren't needed any more. So they get laid off. New positions will open at Google though.
In other words, Yahoo is making *more* money now than before. That's not what I'd typically call 'weakening' a company.
The drawbacks for Yahoo are the following:
- Google - its main competitor - is ALSO making more money now.
- They're dependent on their main competitor; given Google's history of mostly not being assholes, that's not as bad as being dependent on other companies though. Still, I'd call this the main drawback of the deal.
- Google now knows everything about Yahoo's audience. Since they have the largest search engine and the Google toolbar though, they probably already knew this before.
To wrap it up, I do not believe that this is weakening Yahoo.
There was a lot of technology MS wanted to 'innovate' from Yahoo, not just the advertising/search services (Yahoo Groups, Zimbra, YahooMail, a lot of PHP coders and code). Though I think MS thought Yahoo would be more desperate and be able to finagle something cheaper, but they misjudged them.
"Enjoy what you're doing! If it becomes drudgery, you're doing it wrong!" - Jim Butterfield
Google is a publicly traded company and as such it's only obligation is to it's shareholders.
Few companies set out to do bad deeds but most won't rule them out. Google was supposed to be different. Regarding "Don't be evil"(tm), CEO Eric Schmidt recently clarified the policy saying that it was simply meant as a conversation starter.
Here's Google from good to bad...
+7.1 - Philanthropy
Creating a foundation to fight poverty.
+5.3 - Coddling staff
Establishing on-site day care as an employee perk.
-2.4 - Moral Triage
Giving Brazilian police access to private photo albums on Orkut to assist an investigation into child pornography.The lesser of two evils is still pretty lame
-4.8 - Immaturity
Google's on going smear campaign against Privacy International for giving them a last place rank.
-6.7 - Screwing staff
Raising cost of on site day care to $57,000 per year.
-8.3 - Censorship
Instituting keyword filters at the request of the Chinese government. Google's do no evil policy only applies to the U.S.
Source: Wired 16.10
I work at Yahoo at the Mission College campus. This article is about oh, 6 months too late? We at Yahoo already figured this out, months ago.
The day that Jerry betrayed us and announced that they were doing a "trial" test of Google ads was the nail in the coffin for most Yahoos. If you cede search and search advertising, you might as well ditch every sense of innovation and technology that the company has. And he did that. I mean, honestly, what else is there at Yahoo in terms of technology? Nothing, we become nothing more than AOL, a content provider.
In the conference call he had with search when they first announced the "experiment", he said "I want to thank you for all the hard work that you did, and it's because of all your hard work that it allows us to try this experiment." How ridiculous was this statement? It was disgusting and I guess he didn't realize how backhanded that statement was.
OF COURSE Google wants to keep Yahoo weak. I'm not a Microsoft fan, but at least a combined Yahoo-Microsoft would have had a chance to compete against Google and wrest some of that advertising space away, with Microsoft's deep pockets. Instead of fighting, which all the Yahoos wanted to do, we are just a bunch of snivelling bitches of Google now. By doing this, they prevented any decently sized competitor from being created, and they kept their two second-largest competitors separate and ununified. It was a brilliant move on Google's part.
The fact is, projects like Panama and Apex failed. But if we give up, Yahoo is basically nothing, except for a bunch of perl scripts and html pages. The only chance that Yahoo had to capture some glory was to make a compelling ad system so that we could take some market share away from Google. Now, by feeding off the teat of Google, there is NO WAY that we will ever be competitive. It was truly making a deal with the devil, to increase short term revenues, and to make their earnings numbers better to save their own asses. Next is to go completely with Google ads, and then after that next after that is to drop search altogether. Why bother? Might as well go all the way, and lay everyone in MC2 off.
Jerry Yang has completely bungled this company, and will unfortunately go down in Silicon Valley history as the worst non-fraudulent CEO ever, that ruined his own company with his own ineptitude. He should have made the deal with Microsoft. You could even tell on the devel-random list how the tone changed. Even the most die-hard Yahoos now realize what a shell of a company Yahoo has become, and are just waiting around, playing foosball and surfing the web, while we all away the great Layoff of 2008.
I can't imagine why Google and Yahoo would form a partnership in order to weaken Yahoo. That's the one thing that Yahoo management is good at.
Thank you very much, oh kind AC! :)
Why would an advertiser bother with going to Yahoo to buy search ads, when they can go to Google and buy ads for both Yahoo and Google. This severs the relationship between Yahoo and the ad buyer and makes the buyer only go to Google. Soon, Yahoo is out of the search ad business entirely and it all goes through Google. What if Google changes rates, doesn't send the highest yielding ads to Yahoo, etc. Eventually Yahoo is at the mercy of Google, who promises to do "no evil", but perhaps "no evil" really means anything that hurts Google's revenue stream!
This deal is an admission of failure by Yahoo and says that they can't compete. Google has 70% of the market and is a monopoly. If search were PC software or cars, the government would be suing GOogle.
Google to Yahoo is like Vlasic to Wal-Mart in your example. Google is the supplier, and Yahoo the distributor. Establishing a distribution channel is the hard part, so Wal-Mart had an upper hand to threaten the termination of the non-exclusive deal because that would significantly affect Vlasic the supplier by undercutting its product distribution.
Yahoo in the Google ads deal already has its own distribution channel and even its own supply of ads. Yahoo is more like Wal-Mart, who carries its own Sam's Club breakfast cereal in addition to well-known brands such as Kellogg's and Quaker.
I once had a signature.
since when truth became flamebait ?
the woman CONFESSED in front of a senate committee for god's sakes. she said 'i made a mistake'. they asked, how many times, she said FORTY.
leave aside being flamebait, this explains how big a joke department of justice is, and what motives it has for accusing google with undermining yahoo.
ill wake you up -> microsoft.
Read radical news here
Chrome is incredible at what it does (vastly speeds up code-heavy sites), Orkut is practically a way of life in Brazil and India, and Android phones aren't even out yet but Motorola is committing hundreds of people to developing on it because they love it so much. If those are the "worst" products you can pick out, then Google seems to be doing pretty well.
I just decided to switch my default search engine to Yahoo for a while, but I don't see any ads on their search page.
LaRouche is a scammer and a kook.
But I have read that elsewhere, actually in a book about Wal-Mart.
Wtf would Microsoft want with PHP coders or code? It would offend their sensitive sensibilities to use anything but ASP.NET...
...and I don't see anything wrong in the Yahoo!-Google deal.
What people tend to forget in this emotional drama is that the primary purpose of Yahoo! is not to compete with Google. It is to make money. If they are not making money by being in the same ad space as Google, and they can make money using Google's services, then so be it.
To draw parallels with another of the Valley's famous pissing matches is easy. Remember Steve Jobs's infamous quote? "There were too many people at Apple playing the game of, for Apple to win, Microsoft has to lose. And it was clear that you didn't have to play that game because Apple wasn't going to beat Microsoft. Apple didn't have to beat Microsoft." Apple learned that lesson and went on to greater things.
Yahoo!'s biggest problem is that they have too much emotional investment in losing products. The cuts that they make to the workforce are global, when they should be severing off those divisions that do not make money nor are ever expected to make money even as loss leaders. That includes the supernumerary VPs and SVPs parasitizing off the corporate body. They also have to convince their investors that they will never ever experience the explosive growth Google did, and that they need not go into every market that Google enters. Google's growth is irreproducible by anyone this decade.
Yahoo needs Google, Google doesn't need Yahoo. Enough said.
Although I am a google fan, I think that this article has some relevancy. It talks about a "certain non-evil company" that offered to buy it out to prevent it from taking VC investment. After which it got cold feet, the deal fell through, and the company went under. http://news.cnet.com/8301-13505_3-10053013-16.html