Microsoft and Yahoo!. Don’t do it.

A personal view.

Microsoft should not buy Yahoo! or execute a transaction to gain control of its search assets other than via a distribution agreement. The technologies are incompatible, the brands are incompatible, the people are incompatible. Microsoft is a smart business. It can compete effectively in online display advertising and Bing has shown it has the wherewithall to do the same in search. Marketing and distribution will drive Bing’s growth not a merger. The quickest way to 25% is to add Bing’s 10 to Yahoo’s 20.

A Yahoo! transaction would be a distraction. The share gains in search may be hard to sustain, the share gains in display may attract the attention of regulators, the share gains in e mail (from a full merger) certainly would, the share gains in technology and IP would be less than epochal.

Microsoft is at it best with real focus. Bing, X Box, Windows 7 and the new Windows Mobile are impressive as components and formidable in combination. Yahoo! is neither the right target, nor the real enemy for Microsoft and mergers sometimes serve the purpose of telling your own team that they are not good enough.  This would be wrong on all counts.

1 Comment

Filed under The world we work in

One response to “Microsoft and Yahoo!. Don’t do it.

  1. Explain yourself

    how do you reconcile this with your view 8 months ago that a Yahoo / MSFT tie up in any one of a number of forms was good?

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