Microsoft makes a play for Yahoo

The world of Internet content management is a highly competitive playing field. Back when most… The world of Internet content management is a highly competitive playing field. Back when most of us were in elementary school, Yahoo was at the height of technology – I personally had a Yahoo homepage when I connected to the Internet with AOL 3.5 and a 14.4 KBPS modem.

Now I haven’t visited the Yahoo website for years, and Google has taken its place as my homepage. Most people have never even realized that Microsoft has a search function, and those who have would rather be caught dead than be caught visiting MSN.

Microsoft wishes to rectify this situation and gain popularity in the search-engine market. The company has offered $44 billion to Yahoo completely out of the blue in order to take over the passe search giant. The matter is up for consideration at Yahoo because of the sheer markup offered by Microsoft. When considered as individual stock prices, Microsoft is offering Yahoo some 60 percent above its current share value.

Most people who are offered $44 billion wouldn’t turn it down without some level of careful consideration. Yahoo is also considering it simply because its business is in dire straits. Although Yahoo still runs a very popular Internet e-mail system and offers popular message board, online dating and other services, it has been consistently losing out to Google on its original enterprise – searching.

Let me consider exactly what a takeover of Yahoo by Microsoft would entail. There are, of course, multiple possibilities, the least objectionable of which is that Microsoft would retain the Yahoo service, logo and brand name and simply fill Yahoo pages with Microsoft propaganda.

The most objectionable of the possibilities is, conversely, having Microsoft completely take over Yahoo, changing its name and simply enveloping former Yahoo services into existing MSN websites. This would mean a lack of streamlining and the attempts to further make MSN into a Windows clone.

I would estimate, also, that such a merger would be counterproductive in light of Google’s search dominance. Microsoft would like to think that combining companies would assist the Yahoo/Microsoft pair in taking on Google, but I would venture that turning Yahoo into a Microsoft outlet would drive even more users to the “still free” content of Google. This problem would be made worse if Microsoft chose the route of simply turning Yahoo into MSN 2.0.

A move by Microsoft does not sit well with some governments, either. The European Union will undoubtedly scrutinize the situation if Microsoft successfully acquires Yahoo – it will be searching for violations of anti-trust legislation. The European Union has continued to be suspicious of Microsoft after convicting the company of predatory marketing practices with its Windows and Office products.

All of this discussion seems to count Yahoo as a dying company. Yahoo has some things going for it. It still has a large market share in free e-mail service. It also has footholds in news, online dating and other non-search services.

Microsoft has much smaller shares in these items – if any share at all. Yahoo might be able to benefit by retaining autonomy and simply investing more money in attempting to beat out its competitors in non-search services.

Whatever happens, the face of Internet searching will never be quite the same. If Microsoft is rebuffed by Yahoo, Yahoo will undoubtedly change its corporate structure to take advantage of other markets besides Internet searches. Google will more than likely continue to have dominance for a time, and Yahoo will do its best to concede most of the Internet searching to Google.

Microsoft is at the bottom right now, so any move will probably assist its standing. Even if giving into Microsoft’s demands is a detriment to Yahoo, the weight and glow of $44 billion might sway Yahoo decision makers into accepting Microsoft’s offer.