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March 14, 2007
There's been a lot of talk, speculation, and predicting going on in the blogosphere about the future of Yahoo. Top amongst the rumors and speculation for a while was the idea of a Microsoft buyout of Yahoo. We don't see that happening.
John Battelle has proposed another scenario that one could argue was even more radical: a Microsoft / Yahoo joint venture spin-off search company.
In his scenario, Battelle suggests that the best way for Microsoft and Yahoo to do battle with Google is to join forces on a new, separate company jointly-owned, financed, and managed by the two technology companies. Yahoo would provide the bulk of the technology and Microsoft, with its deep pockets, would provide the majority of the funding.
By combining their resources and using their individual strengths, the joint company would be able to deliver a product superior to both Yahoo and Microsoft's individual offerings. Battelle also suggests that both companies would then be able to put their individual resources back on their primary businesses:
It's an interesting idea. But it's one that I don't see happening. Battelle concedes that it could be a bit far-fetched. And my main problem with the scenario isn't necessarily the idea itself (I think it could actually turn out to be a decent product). It's the rationale behind why such a venture is even needed:
Is that really what "the world" wants? No. It isn't.
Advertisers want it. Content publishers, website owners, and bloggers want it. Uber-users want it. We want something else because we want diversified ways to make lots of money with our websites. Advertisers want it to get their message out to even more people. Uber-users want it for any number of reasons (more options, anti-Google sentiments, etc).
Independently Microsoft and Yahoo want to become the "legitimate answer to Mountain View"… but they want that for themselves. From our outside perspective it might make sense for them to join forces. But from the perspective of each company, it wouldn't. Microsoft doesn't want to share their dominance. Neither does Yahoo. Both think they can go it alone.
And the rest of the world? They couldn't care less. They're happy with Google, Yahoo, or whatever else they use. There's no public outcry for a better Yahoo or a better MSN/Live. And both Yahoo and Microsoft know that. Their strategies are more about getting people locked in or hooked on their existing search technology than answering some non-existent plea from the masses. People aren't lining up around the corner to beg Microsoft or Yahoo to save them from Google. They're quite happy with Google. And it's continually-increasing market share only serves to illustrate that point.
So before any kind of Yahoo-Microsoft merger would be even remotely plausible, a couple of things would have to happen:
So yes… I think Battelle has proposed an interesting idea. But it's an idea that I don't think will ever come anywhere close to fruition.
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