Sun-Times – “The Microsoft/Yahoo! Deal”

This column was originally published in the Sun-Times on February 7, 2008.

For the past couple of years now, everyone here in Geek World has been hearing rumors about about Microsoft’s desire to buy Yahoo!. It’s uncannily like when one of your friends keeps honking on about wanting to get the entire original cast of “The Dukes Of Hazzard” — not even the TV show…the movie — tattooed on his back.

It’s obviously a bad idea and you hope that he doesn’t go through with it. But the more you hear him talk about it, the more you’re convinced that it’s all just talk. To your eternal relief.

Well, as you all know, last week Microsoft had the sketches drawn up and got its back shaved. It’s probably time to stage an intervention or something.

In truth, it’s a logical time for the company to make this move. Yahoo! and Microsoft have both hit some hard times in the past couple of years and their suffering intersects. Yahoo! has been rolling out a solid string of creative successes and smart acquisitions. They happen to be my favorite “destination” for online news (Yahoo!’s presentation and its signal-to-noise ratio are both better than Google’s). They’ve rolled out a mobile portal that makes all of their services attractive and relevant to users of just about every phone on the market, from cheap to pricey. And they hold the pink slip to Flickr, the online photo service that I simply can’t do without.

What they don’t seem to have is a lot of success translating innovation into profit. And despite having lots of talent on the payroll, Microsoft still suffers from a frustrating inability to move fresh, innovative ideas off of the conference-room whiteboard and into the hands of its users.

Microsoft has money, Yahoo! is at a stage where they can be bought out fairly cheap…it wasn’t hard to hear the buzzing of the tattoo needle.

But it’s probably a bad idea. Bad for Microsoft, bad for Yahoo!, bad for users.

When Yahoo! acquired Flickr, for example, the photo service’s users were none the wiser. Yahoo! happily torpedoed its own far-inferior photo portal and the only noticeable change to Flickr (apart from signing in through Yahoo!) was the appearance of a tiny, apologetic Yahoo! logo at the bottom of every Flickr page.

Microsoft probably isn’t interested in Yahoo!’s services, though: only its assets. It just wants Yahoo!’s search technology and its advertising engine, for a start, plus I’m certain that Yahoo!’s mobile portal would be re-branded. Bonus: the acquisition would take Yahoo! Mail, Messenger and Maps off the playing field.

But make no mistakes: a Microsoft purchase would likely cause Yahoo! to cease to exist as a distinct identity, along with many of its best features. When Microsoft walks through your house as a potential buyer and they tell you “That’s a gorgeous oak staircase, and I’m in love with that 130-year-old marble fireplace!” the implied suffix is “I bet if I demolish the upper two floors, a crane could lift that stuff onto a flatbed and get it to my new house’s construction site, no problem.”

The purchase wouldn’t be a good for Microsoft, either. If Microsoft and Yahoo! failed as individuals to make much of a dent in Google’s control of advertising and search, what is its plan to succeed as a team?

Moreover, Microsoft is so hot to make this $44.6B deal happen that they’re willing to go into debt for (I reckon) the first time. In any other company, this would be the onramp to a familiar and terminal downward spiral. In Microsoft, it feels like a story that ten years later, begins with the phrase “in retrospect, it was obviously a mistake…” and is offered as the reason why Microsoft failed to put in the winning bid to provide the communications infrastructure for the new DisneyNode colony in the lunar Fra Mauro lowlands.

Google didn’t waste any time issuing a statement outlining their concerns about the acquisition. When Microsoft acquires another chunk of the Internet, power is consolidated just a bit further and there’s that increased risk that formerly open services will require proprietary technologies and infrastructure.

Good points. But hey, would Coke be happy if Pepsi tried to buy RC Cola?

I do believe that this acquisition wouldn’t do anybody any good. But let’s be fair. I love Google, but they’re the Goliath in nearly any story you care to cast them in. And though I insist that Macs and iPods are hands-down the best answers for my personal needs, if Apple exerted any more control over its users’ options, they’d demand that a heroically-proportioned portrait of Steve Jobs be hung in any room where five or more Mac users gather.

Yes, there’s the fear that a Microsoft’s acquisition of Yahoo! would create “one nation, under Internet Explorer.” But the far scarier fact is that choice and openness were largely illusions to begin with.

10 thoughts on “Sun-Times – “The Microsoft/Yahoo! Deal”

  1. Chris N

    I whole-heartedly agree. If Microsoft buys Yahoo!, they will take it apart, let fall by the wayside the pieces they don’t, rebrand what they do want, and still not be able to compete with Google.

  2. Ihnatko Post author

    @jfletch – Eh? It doesn’t say that. It clearly says “…to cease to exist as a distinct identity.” See? Read it again.

    Honestly, where do you people come up with this crazy talk?

  3. zacksback

    Ballmer, et. al., are suffering from delusions of being the grand barons of the Technology Empire. Having a made a mountain of money from doing one thing adequately in the ’80s, they think they can translate that success to the rest of the Geek nation. Their track record is abysmal. Yet they soldier on. They may want to be the new General Electric, but they are heading toward the old General Motors but without even a few sparks of innovation or creativity. That said, if Yahoo! does escape with their asses intact, they had best take this as a wake-up call to find their corporate niche and exploit it to the fullest.

  4. Rob R

    Slick, Andy.

    I did that once with an ecommerce site that didn’t have a return policy listed and a customer wanted to return something for full cash value – log in, add “a 50% restocking fee applies to all returns”, click update and then request that the customer review the policy…

    “With great power comes great responsibilty” – Uncle Ben

  5. Myra J (at work)

    Well, I guess it’s all moot now. It would have been interesting though, in a sort of mega-financial-soap opera sort of way. As a Mac-fanperson, I am detached enough to have found this interesting.

  6. Matty G.

    I’d be curious to hear further about the international implications of such a deal. We’ve seen how warmly the EU has embraced Microsoft, and given Yahoo’s traction in Asia – how would Microsoft be welcomed there? Additionally on a smaller level, for example in Australia here, we have one network affiliated with Yahoo (Network Seven), and MSN affiliated with another (Nine Network). Which folds into which? At what point are cross media ownership laws affected on a nation-by-nation basis?

  7. option-shift-k

    Microsoft has a fervent suckage record with search and the “cloud in general”. What happened to the software sector of MS. I would like to have vista work before I would want crappy web services. The bottom line is that yahoo is bloated. The company should get rid of the unessential services and focus on a more stable line of services.

  8. CapnVan

    Any suggestions on where I can find an “heroically-proportioned portrait of Steve Jobs” on the cheap? Just in case, of course.

  9. Chris

    This sentence:

    “The purchase wouldn’t be a good for Microsoft, either. ”

    Should read:

    “The a purchase woundn’t a be a good for a Microsoft, Luigi!”

    (Ihnatko is Italiano no?)

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