Microsoft Makes Offering To Acquire Yahoo!

Posted February 2nd, 2008 08:50:23 am by Jarrod Goddard

It has been predicted a long time ago, and although Microsoft was rumored to be looking into acquiring Yahoo last year, they made an official bid to buy Yahoo for $44.5 Billion yesterday.

Microsoft has made a bid to buy Yahoo! for almost $45 Billion! This by no means that they have bought them yet, Yahoo!’s board has to accept the deal, and then it has to get approved by government and the FCC, so nothing will be determined for at least a year in my mind. It takes time for these deals to go through but I expect Yahoo! to bite on this deal, with a $31/share offering that’s worth much more than Yahoo!’s current stock price, (maybe that means you should go buy Yahoo! stock!) and with all the dropping revenues and stock in Yahoo! over the past year, they have to do something to try fix this ailing company. But realistically, I don’t think this will do much to help either company compete with google.

Microsoft To Buy 22% Search Engine Market Share

Yahoo! has been the second most popular search engine for a long time now, with recent stats placing it in second with 22% market share, behind Google’s 58% and ahead of MSN’s 10%. It’s been a couple years since Steve Ballmer said they’d be ahead of Google within one year, and they haven’t made any ground at all. So why not buy Yahoo! that’s one way to gain market share. My opinion is that Microsoft has made the offer only in an effort to buy users. With all the TV commercials they haven’t been able to drive more users to their search engine (maybe they should have talked to Ask before they ran those campaigns), and with most of their current search users coming from MSN’s home page rather than search.msn.com, this acquisition of Yahoo! would really only benefit them from the substantial increase in market share.

Microsoft Buying Into Linux and PHP

What I think is the most interesting, is that Yahoo! has never used Microsoft products. They also made a huge investment in Facebook, which is based on PHP and Linux. They acquired Hotmail back in 2000 which was also based on Apache/BSD. Now Yahoo, which has been a poster child for PHP, MySQL, Linux and BSD. One of my favorite MySQL books was written by expert Yahoo’s Jeremy Zawodny. I think two things to watch for if this acquisition goes through is what happens with the existing staff of engineers. They’ve been leaving Yahoo! for a while now, and I don’t think many of them would have much interest in working for Microsoft. The second thing that will be interesting is to see what Microsoft does with all of Yahoo!’s existing web sites and properties, not just Yahoo! but Flickr, Delicios, Yahoo! Directory, Yahoo! Answers, and of course Yahoo’s search marketing engine Panama. I expect them all to stay put, with the exception of Panama. AdCenter is much improved over Panama, in my opinion, and I expect Microsoft to phase out Yahoo Search Marketing in favor of AdCenter within a year from when the acquisition goes through… if it does. The other properties should stay where they are, there is no need to port them at this time and risk screwing them up like Microsoft did with Hotmail. John Gruber had some similar thoughts on the subject.