Merger News: Microsoft and Yahoo Make a Deal!
All I can say is…it sure took long enough. After months and months of negotiating, bidding, rejecting, reneging and crying, it is finally done. No, not a merger, bur rather a strategic alliance, if you will, between two of the industry’s powerhouses, to form, ideally, an entity capable of eventually challenging Google (though combined, they still control less than half of the market share that Google controls – 65% vs. a combined 28.4% or so – go figure).
Getting specific for a second, the deal is a 10-year contract in which Yahoo will use the Bing platform on their sites, license their software to Microsoft to be used as Microsoft wishes, and will handle the sales of search ads for both companies. In exchange, Yahoo gets to be good pals with Microsoft, and will receive 88% of the search ad revenue from their sites for the first 5 years. The changes will mainly take place behind the scenes, so user confusion should be minimal.
Although Microsoft believes that this will catapult them beyond Google, analysts aren’t so sure, as many believe the real issue is in coming up with new ideas, not picking up a few %age points in market share through an alliance – we’ll see though – perhaps collectively they can come up with some strong ideas. According to shareholders, Microsoft has made a good deal (share price is up on the news), but Yahoo could have done much better (share price is down…pretty hard…on the news) – but these things are fickle; sentiment changes quickly around here. Personally, I like it – not necessarily the financials of it, but rather the idea of coming together to, hopefully, develop something better, something innovative, and something that presses Google to really do the same.
