Yahoo Goes Scorched Earth

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1. Brent_Cheeseburger
   

   April 10th, 2008 at 1:47 am

   Yan Can Cook. But Yang Can’t Manage! I love it.

2. amay
   

   April 10th, 2008 at 1:53 am

   ah,Yahoo bit Misoft

3. Bucking the Real Estate Trend
   

   April 10th, 2008 at 2:09 am

   Who still uses AOL?

4. Trench
   

   April 10th, 2008 at 2:09 am

   I don’t know if it has been mentioned yet, but it seems like we’re forgetting something pretty vital here.

   http://www.google.com/press/pr.....anded.html

   Which makes your poll in your previous write-up a bit unbalanced.

   It should have read:

   Which Would Be A Stronger Yahoo Entity?

   Microsoft-MySpace-Yahoo

   or

   Google-AOL-Yahoo

   (I’m betting the results would have been much different, eh?)

5. Samidh Chakrabarti
   

   April 10th, 2008 at 2:10 am

   This YHOO/MSFT drama is going to turn out to be a fascinating case study of what it means to “maximize shareholder value” in corporate America. Clearly, Yahoo’s behavior is sacrificing shareholder *economic* value. It’s hard to argue anything positive economically to (1) poison pill severance packages, (2) buying internet roadkill AOL, and (3) ceding search marketing to Google. Will their shareholders let them get away with it? Perhaps, like Yang, enough shareholders accord enormous *sentimental* value in avoiding a Microsoft hostile takeover. In other words, it could be that sentimental attachment is more valuable to Yahoo shareholders than their stock holdings. Economically irrational? Absolutely. Welcome to Human Nature.

6. PressReleasePoint
   

   April 10th, 2008 at 2:10 am

   Why should Yahoo so adamantly and irrationally destroy itself by selling its soul to Google in order to oppose the Microsoft deal. By becoming part of Microsoft, it can at least create a meaninfull alternative to Google heavy weight. It is more an emotional response, not a logical one. It is only posponing its demise by surrendering to another rival.

7. joris
   

   April 10th, 2008 at 2:13 am

   Interesting article. But why do the shareholders let this happen?

8. Shawn Farner
   

   April 10th, 2008 at 2:14 am

   I would much rather have AOL and Yahoo come together and take on the Yahoo brand. In my ideal world, they’d lose Messenger and keep AIM (which I feel is superior). However, they’d keep the vibrant Yahoo community (chat rooms, games, etc.) They’d definitely be a force.

9. Blogie
   

   April 10th, 2008 at 2:16 am

   Yahoo is done for. I think Microsoft has it in for them badly. And I agree, we need a counterbalance to Google, which is becoming a bit of a bully lately.

10. Trench
    

    April 10th, 2008 at 2:21 am

    I understand everyone’s worries of Google becoming too dominating… but when I weigh that against Microsoft’s history (which is what we have to look at), I’ll take the Goog domination any day over yet another MS fail.

11. Trench
    

    April 10th, 2008 at 2:25 am

    Which of these looks more appropriate:

    1) google search - gmail - flickr - del.icio.us

    or

    2) live search - hotmail - flickr - del.icio.us

    I mean, srsly.

12. Blog Opinion
    

    April 10th, 2008 at 2:30 am

    when the game will be over.

13. YDRIVE
    

    April 10th, 2008 at 2:31 am

    Good show. Don’t let it stop.

14. Michael Arrington
    

    April 10th, 2008 at 2:34 am

    trench - agree. but we have to take into consideration the massive market share of internet advertising dollars that flows through google. and the only way to ensure that they pay an appropriate share to partners is through real competition.

15. John Graham-Cumming
    

    April 10th, 2008 at 2:39 am

    Sing along with Jerry:

    They tried to make me go to Redmond
    I said no, no, no.
    Yes it’s been bad, the stock’ll come back
    We’ll grow, grow, grow

    We ain’t got a clue
    But Mr Ballmer thinks we do
    He’s tried to make me go to Redmond
    I won’t go, go, go.

    I’d rather be at home by the Bay
    But can’t just sit here an’ pray
    Cos there’s nothing, nothing they can teach me
    That I can’t learn from Dr Eric Schmidt

    41 B’s not enough
    But we’re worth more than that small stuff

    They’re tryin to make me go to Redmond
    I said no, no, no
    Yes it’s been bad, the stock’ll come back
    We’ll grow, grow, grow

    We ain’t got a clue
    But Mr Ballmer thinks we do
    He’s tried to make me go to Redmond
    I won’t go, go, go.

16. kuldeep
    

    April 10th, 2008 at 2:42 am

    Its pity that you are thinking only of advertising market and not the open standards movement of internet.

17. Hendra
    

    April 10th, 2008 at 2:51 am

    Any deal that can keep Muckro$oft at bay is a good deal. I wish Yahoo will prevail at the end of day.

18. Yakov
    

    April 10th, 2008 at 2:57 am

    It’s obvious that Yahoo! needs a technology breakthrough before any site will start dropping them. What don’t they look around and check who out of theior partners can bring in that breakthrough instead making those value-destroying moves described in TC article. Take Quintura as an example, from early implementation of our search cloud on partner sites we already know that we bring 70% more user engagement with search than a search box. and when we turn on graphics in the search cloud…

19. web hosting
    

    April 10th, 2008 at 3:00 am

    That can look possible if both google & yahoo join into a strategic alliance.

20. Richard C0r5a13
    

    April 10th, 2008 at 3:05 am

    @18 = spam

21. Dom
    

    April 10th, 2008 at 3:07 am

    Perhaps the only real solution is to split Yahoo down the middle and share it out.

    The trouble is, the only part of Y! that anyone *really* wants is Flickr.

22. Alexk
    

    April 10th, 2008 at 3:10 am

    Let’s just make a 5 season serie of that stuff, called Microhoo.
    This whole Yahoo/Microsoft story is just annoying everybody. Too much noise for nothing, at the end nothing’s gonna happen.

23. agent mulder lives
    

    April 10th, 2008 at 3:11 am

    People–one is posturing and another is about option value.

    Y!’s testing of G’s monetization abilities is purely to tell M$FT that, yeah, we’re worth more just by outsourcing search advertising to Google. Net effect is to get M$FT to up the bid. Is it a credible move for Y! to solely focus on just display ads? Yes…in a shortsighted way

    Y! is speaking with AOL b/c IF they were to merge, then I don’t think M$FT can reasonably justify acquiring the combined beast–from a price (add a premium) or timing or regulatory perspective. So, the intent again is for M$FT to up the bid for Y!

    AOL is speaking with Y! b/c if M$FT acquires Y!, then AOL is a bit SOL…maybe News bait at best? So, AOL is incented to join the fray–at least they can force News’ hand and get a better price. No way G ever acquires AOL.

    G is there twofold: hey, maybe Y! does outsource to G…or if M$FT is successful in acquiring Y!, then the pain inflicted upon M$FT is worse (higher price paid and there’s still regulatory review and then integration pain)

    Separately, a M$FT-News joint bid for Y!AOL (”Yea-OL”) would be incredibly interesting!

24. Voice Of Reason
    

    April 10th, 2008 at 3:17 am

    DING! DING! DING! We have a winner. Thanks for playing, Agent Mulder.

    I can’t believe I haven’t read any analysis yet that points out that Yahoo can take the data from their Google search results test and ‘project’ how it would potentially change their numbers — i.e. make their assets look valuable, even if they have no intention of outsourcing all of their search advertising to Google.

    This is clearly a play to try and get more money from a suitor.

25. TM
    

    April 10th, 2008 at 3:27 am

    I can’t help but feel that the events of the last month could be early warning signs that Microsoft-Yahoo are going to be the next textbook example of a poison pill strategy after the Oracle-PeopleSoft acquisition.

    This kind of scenario only really fits with one type of acquisition strategy (buying a company purely for capital assets and a share of existing customer base)

26. Nhim
    

    April 10th, 2008 at 3:30 am

    A time Microsoft + Yahoo will more big Google ?

    Wait palpitation is looked up

27. Ahmad
    

    April 10th, 2008 at 3:56 am

    Yahoo will be part of MSFT sooner or later !

28. Ryan MF
    

    April 10th, 2008 at 4:04 am

    This has been, and continues to be, a huge effing mess. I understand that there needs to be a foil to Google to keep them honest, but as pathetic as Y! looks right now can they even be considered a formidable (search) competitor?

    Otherwise, I just keep hoping that they don’t screw up my del.icio.us.

29. wingthom
    

    April 10th, 2008 at 4:17 am

    Would be a very nice one: finally MSFT gets Yahoo, but Y! already signed a ten years contract with Google for Search Result Ads… so who would be benefitting most ? G! … whatever MSFT invests into Y! would drive traffic and maybe quality into a channel G! already is exploiting very well.

    My Take is that Yahoo/AOL remain independent and rely on what they are most into: putting media and services nicely together and do some cross selling between their properties. If they outsourece some of their services to a provider like Google doesn’t really matter to their users. Nobody outside this media scene thinks: “Uhhh… this video stream comes from a Linux/Microsoft/Google Server I don’t like it..”

30. Howard J
    

    April 10th, 2008 at 4:41 am

    My first comment ever!!

    First, I personally believe that MS-Yahoo would never get by the regulators due to one thing - email. What is it, 75% combined - the EU won’t let it happen.

    Second, you must remember ‘content is king’. Which is why newspapers are collectively down 5-10% across the board but USA Today and the Wall Street Journal are level or growing. They have what people read. Yahoo + AOL would be a brand king. Think about it, Flickr, Del.ic.ous (or delicious.com as their now called), Mapquest, Moviefone, Truveo, AOL Travel+Yahoo Travel (probably huge), AOL Personals (love.com) + Yahoo Personals, AOL Sports + Yahoo sports, and of course TMZ. Also don’t forget Bebo.com. Few realize that Yahoo has the #1 sports site, bigger than ESPN most months. Plus finance, the list goes on and on.

    That said, go back to my original “content is king” comment. Although I really like Google, if tomorrow the TechCrunch search engine is introduced and Mike makes it good AND pays better, Google has problems. The sites which get the traffic (eyes) would flock to it.

    Google has very few people that go to its site for anything other than search. Hence their apps push. MS on the other hand has it’s own issues (See Gardner reports) and MUST find another revenue (or better profit) stream soon or they’re toast.

    Just my 3 cents worth.

31. Peter
    

    April 10th, 2008 at 4:41 am

    Why won’t Yahoo respect my authoritaaahh?!
    – ma

    Why won’t Yahoo respect _my_ authoritaaahh?!
    – hb

    I’m not so sure that it is a wise move to trust the ‘health of the internet’ to a company that…hates the internet.
    – everybody else

32. laloj
    

    April 10th, 2008 at 4:55 am

    http://www.tech-exposed.com

    Yahoo running Google adsense. Wow, now thats a sign of true desparation.
    Is there no one who will stand against the giant Google??

33. augustus
    

    April 10th, 2008 at 4:58 am

    Don’t always agree with you but I do agree with you on this one.

    Although Microsoft is shooting themselves in the foot too. They should have just raised the bid and that was it. Remember Oracle and BeA systems.

    augustus

34. Erik Giberti
    

    April 10th, 2008 at 5:11 am

    @Howard J - Nice insight, I read somewhere (was it here?) a few months back that this also heavily hurts the startup community since the number of suitors decreases. Prime exit strategies for many startups are gone.

35. Nicolae
    

    April 10th, 2008 at 5:13 am

    Why would News Corp entering the Microsoft bid make it any different?

    Money’s money.

    By the looks of it, Yahoo will end up going solo and go with the AOL/Yahoo route.

    And abandoning their own ad platform may be, at the end, a smarter move than going with their own platform, given that Myspace was guaranteed $900 million for that platform alone and Yahoo/AOL properties would fetch a multiple of that, which could end up, on a P/E basis, increasing the combined Yahoo/AOL stock price by a huge margin.

    The AOL/Yahoo merger, by no means, is a scorched earth tactic.

    It’s smart counter hostile attack defense move, the smartest so far.

36. Cesar Cardoso
    

    April 10th, 2008 at 5:15 am

    Jerry Yang won’t sell Yahoo! to Microsoft. Deal with it, people. It’s not a question of economics, but pride. Jerry Yang won’t sell Yahoo! to Microsoft. He’ll commit corporate haraquiri than sell his company to Microsoft.

    The only way Microsoft will buy Yahoo! is via a proxy war. The problems with proxy war is that they’ll take long enough to get a Pyrrhic victory.

37. Nicolae
    

    April 10th, 2008 at 5:24 am

    On using Google ad serving technology, from Bloomberg:

    “Last year, Yahoo introduced an ad platform, called Panama, designed to make search ads more relevant and more likely to be clicked. In a presentation to investors last month, Yahoo said it had reduced the gap in revenue per search between its own engine and Google’s in the U.S. by 30 percent in the first nine months of 2007. At the end of last year, a difference of 60 percent to 70 percent still existed, the company said.”

    60 to 70 percent!!!!

    Yahoo/AOL can increase revenues overnight by potentially that amount by adopting Google ad serving technology.

    And giving Google a share of those revenues will still be a net positive for Yahoo, possible by a huge margin.

38. noam
    

    April 10th, 2008 at 5:39 am

    Yahoo! is playing the game.
    In my opinion, it has no intention of joining forces with google in the search field. The comment was made to scare Microsoft away.

    Abviously, Yahoo! will not be able to reject MSFT’s offer, especially if it is a higher bid given by News Corp. and MSFT together. Yahoo’s only chance of staying out of MSFT’s hands is if MSFT itself takes back its offer.

    The cooperation with google will never happen. But MSFT doesn’t have to know that, for the time being!

39. John Carson
    

    April 10th, 2008 at 5:58 am

    AOL have certainly changed their tune from the Yahoo search I did the other day:

    http://www.johnjamescarson.com/yahoo.jpg

40. Adrian Keys
    

    April 10th, 2008 at 5:59 am

    @17

    “Muckro$oft”

    Now that’s a good one!

41. Jon A.
    

    April 10th, 2008 at 6:10 am

    Michael is absolutely right. Then again, it’s why startups continue to flourish in silicon valley- most valley management is consistently incompetent and smart people want to get away from the circus. Yahoo needs to keep in mind that despite all the talk about Microsoft’s monopoly and cultural issues, Microsoft did nothing to unfairly undermine Yahoo. Yahoo’s failures are entirely unrelated to Microsoft’s ‘monopoly’ power. So it’s surprising to see Yahoo take such a hostile position toward Redmond while preparing to embrace the one competitor that buried them alive, Google.

    Yang’s behavior reminds me of McNealy during the dot com boom- focused on pointless diatribes about Microsoft but failing to deliver results or establish a path for the company’s future growth. It’s more about egos than business or maximizing shareholder return. It’s a joke. Unlike this kind of incompetence is cleaned up, silicon valley will continue to lose to Microsoft and talk about how Remond unfairly beat them in the marketplace.

42. Andrea Campi
    

    April 10th, 2008 at 6:18 am

    In a move reminiscent of the Italians switching sidesin World War II

    every time you make political or historical comments, you prove once more your obtuseness and lack of any understanding of history.

43. lbsterling
    

    April 10th, 2008 at 6:21 am

    Listen to “The Voice of Reason” (#25). Yahoo’s investment bankers are leaking information left and right about potential other deals _ just enough to be credible _ in order to force MSFT to move now, raise its bid, and stop the bleeding at YHOO.

44. Tom Grubisich
    

    April 10th, 2008 at 6:21 am

    Mike is right that Microsoft’s purchase of Yahoo is the only way to keep the Internet competitive, but Yahoo’s staged mating dance with AOL gives a few shreds of credibility to its claim that it’s worth more — maybe $50 billion. The end result should be a Microsoft counter-offer 10% higher. Everybody’s happy.

45. Ray Burt
    

    April 10th, 2008 at 6:38 am

    Samidh at 5 is right.
    Jon at 43 is right.

    This is ego pure and simple put above realistic marketplace issues and shareholder value.

    The Sun reference is dead on.

    Ego might feel good, but helps one become irrelevant quite quickly….

46. Ray Burt
    

    April 10th, 2008 at 6:39 am

    Oh yeah….Cesar at 38 is right too.

47. The Mad Hatter
    

    April 10th, 2008 at 6:55 am

    Maybe the Obama campaign can buy Yahoo. That would fix everything.

48. Pete
    

    April 10th, 2008 at 7:10 am

    it’s not not scorched earth - that you do when you’re in a position to chase your enemy into the woods and blast out everything in your pursuit of them.

    Maybe it’s more like the “scorched earth defense” but that’s better described as “scuttling your ship” and I haven’t heard Yahoo tossing any of their interesting products (mobile, flickr, etc.) overboard.

    The Yahoo/Google deal is interesting but weirdly non-committal. It’s like Woody Harrelson loaning out his wife to Richard Gere for a million bucks because he’s been a terrible gambler. Wait a minute, didn’t they make a movie about this?

49. Darryl
    

    April 10th, 2008 at 7:16 am

    Will we see a pyrrhic victory?

50. gregory
    

    April 10th, 2008 at 7:16 am

    wait ’til the ad business tanks some more, lots of opportunities for startups just around the corner, just not for the big bucks

51. John
    

    April 10th, 2008 at 7:46 am

    Robert Cringely has an interesting take on why Microsoft is approaching this deal.
    Here http://www.pbs.org/cringely/pu.....04240.html
    and here http://www.pbs.org/cringely/pu.....04309.html

    Essentially suggesting that Microsoft may not actually be interested in Yahoo as much as they are in bleeding out Yahoo’s smartest people and business plans, much like they did to Borland and Intuit back in the 90’s.

52. Dana Koor
    

    April 10th, 2008 at 7:55 am

    nose knifing - also see paying through the nose
    http://en.wikipedia.org/wiki/Pay_through_the_nose

53. JumpTheShark
    

    April 10th, 2008 at 7:59 am

    M$ should buy T¢

    wait

    They did!

    No wonder all this FUD and slimy attacks on yahoo

54. Afraid of the Dark
    

    April 10th, 2008 at 8:02 am

    This is all turning into a lovely incestuous affair that’s taking place, but what Microsoft needs to do right now is to pull their offer ASAP.

    That will leave YHOO to go after AOL deal. If thats a real deal, then in 24 months time MSFT will be able to acquire the lot for roughly the same price it is doing this deal at.

    If that deal is not real, then YHOO will have absolutely no choice but to take the MSFT deal.

    Either way, if GOOG takes the YHOO ad deal, then MSFT will win also. GOOG will be barred from making any further acquisitions in that even leaving MSFT to go out on an acquisition spree that will make GOOG look dumb.

55. joe
    

    April 10th, 2008 at 8:09 am

    Someone brought up the question of E-mail monopoly instead of a search monopoly. Granted Google is able to charge higher prices for advertisers, but it doesn’t seem that difficult to create an Ad placement service. If an advertiser wants eyeballs, they can place ads on the most heavily traffiked websites. If they want targeted search ads, then they would have to use google or yahoo or maybe even yellow pages. Google has become the yellow pages of the internet, but I still think content is king and people still use the internet primarily for news(content) and e-mail. The power of Google is in adsense that can be applied to blogs and independent websites, but even Yahoo PN can create an effective competitor to Adsense.

56. mrosprey
    

    April 10th, 2008 at 8:10 am

    m$ has no choice but to buy up its content if it wants to do better on the web. m$ still trails yahoo for content, but there’s no way yang will want to get bought outright by m$. m$ should take back their offer and do a partnership instead, which gives yahoo $ and helps yang save face.

    imho, an m$+yahoo deal is better than an aol+yahoo deal for yahoo employees. more yahoo properties will be able to stay alive in the former deal and they’d get the deep pockets of m$. of course, if i were a yahoo employee, i’d also hate the thought of selling out to the big bad folks in redmond.

    aol is like the ugly girl with braces hanging out by the wall at the prom. no one really wants to dance with her. and partnering up is only marginally better than sitting along the wall by yourself.

    we can be pretty sure google’s not going to make that big a play for a languid content company, so aol’s other obvious suitor is newscorp. on the off-chance newscorp is actually interested in aol, i’m sure murdoch would hack and slash through aol, and pull the gems out. they have no need to rush. time warner’s motivated to offload aol, but there’s no one out there looking to buy. newscorp can wait till time warner gets more desperate.

    one way or another m$ has effectively killed yahoo as we know it. yahoo is going to be forced to lose its independence. aol+yahoo could just be a desperate move by two desperate comapanies, but it’d buy yahoo more time to improve their search. yahoo’s willingness to play with google now shows they will exhaust every option if necesssary. it’s in google’s interest to play ball, if for no other reason than to keep yahoo out of redmond’s clutches.

    of course, these could all just be efforts to increase the m$ bid. i guess yang figures that if he’s gotta sell, he might as well make m$ pay through the nose for it

57. Ruben S.
    

    April 10th, 2008 at 8:17 am

    Microsoft creates the world’s biggest operating system and office software monopoly in computing history, makes more money from operating systems than any other company in history, makes more money from office software than any other company in history…

    … and uses ALL of that one-company-in-a-lifetime money they’ll never make again to buy a struggling internet company.

    Yeah, nothing wrong with that… everyone who says Microsoft and Yahoo shouldn’t pair up is crazy.

58. Harold
    

    April 10th, 2008 at 8:19 am

    Boy, is this Microsoft-Yahoo! action making a great case study in hostile takeovers! Fun stuff.

59. velioncho
    

    April 10th, 2008 at 8:59 am

    These days I have stopped watching movies for entertainment.

    YHOO vs MSFT and Hillary vs Obama are more entertaining…

60. Luke
    

    April 10th, 2008 at 9:16 am

    If News Corp (aka Fox News) buy Yahoo I’ll pull out of using all their services, even the services I currently pay for and move.

    Not that happy Microsoft might buy them out, as I prefer competition between the three Internet giants, but I would prefer MS to Rupert Murdock.

61. srini kumar
    

    April 10th, 2008 at 9:18 am

    @39 exactly nicolae !! high five.

    Google AdSense will make Yahoo! a truck of money.

    The product is CONTEXT, and Yahoo! is a context generator.

    That means that the AdSense payouts are going to be great.

    AdSense has the market share and mind share with advertisers; Yahoo! should focus on other opportunities, like in BREAKTHROUGH apps. The more it can protect Brickhouse, the better - Yang knows that he’s got a little Xerox PARC brewing up here and no way is Ballmer going to be able to bust a Steve Jobs on HIM !!!!!

    So - here’s what Yang will do - redirect his monetization team from simply competing with Google into figuring out serious revenue models from apps, mail, etc. If Yahoo! can beat Google to the “how the heck do we monetize an APP?” punch, that would ROCK !!! go team yahoo!!!

    - srini

62. Iqbal gandham
    

    April 10th, 2008 at 9:30 am

    I feel that we are all assuming that we need a competitor to google, i.e MS and yahoo tie up to level the playing field, but we are all forgetting that google came from no where to take on the giants like altavista as search.

    There is a slew of new search companies emerging, one of these could just take the mantle and run with it, giving google a headache, since it really has no other stickiness (ok some from gmail + others). Some people these days (nxt gen) are using youtube for their default search, they see it more than a static page to get info, but where they can watch a video about something, so you want to know about Virgin airlines, goto youtube (havent tried it) instead of google, possibly get more info out of watching a video. The internet is becoming more about watching than reading.

    So if we dont actually need to level the field, then MS + yahoo sucks royally.
    Its more than the comps, its about the people, open vs closed.

    Yahoo has a great brand, and actually some really good services, what really does MS have except for cash, very little, hotmail ! oh and a stake in facebook.

    Yahoo just needs better management, a little cash injection, and some TLC. with properties like flickr, zimbra they could really dominate spaces, for MS to buy they get online fast, I mean they have spent a decade moving and really not gone anywhere. Google could do with yahoo for customer stickiness, and to get hold of some really good properties.

    AOL, dont get it, except again to annoy MS

    I think Yahoo should let some of its brands that it has acquired to run on their own, dont intergrate them let them grow on their own. Google will wait until its all done, they don’t need to move, at least thats what they think,,,isnt that what yahoo assumed all those years ago….

63. nitsuj
    

    April 10th, 2008 at 9:36 am

    Remember when everyone thought Semel was the biggest idiot in the valley? Nice of Jerry to prove everyone wrong.

64. david hyman
    

    April 10th, 2008 at 9:46 am

    i’m with you.

65. Fat Adam
    

    April 10th, 2008 at 9:47 am

    Yahoo? Google? Poodle? Doodle? Microsoft? Trendy Loft? News Corp? Boozy Whore? Pah! I’m done with it all, it’s all good for the internet and equally horribly horribly bad and did someone mention AOL , quick pension hell!

    I have sumarised this virtual frotting with a nice image (click above).

66. hyloka
    

    April 10th, 2008 at 9:48 am

    @mrosprey
    “one way or another m$ has effectively killed yahoo as we know it.”

    Really? Yahoo! did this to itself.

    Yahoo! got this cute little puppy Google to do its search, feeding the little puppy lots of money, not realizing that the little puppy was really a pit bull and when Yahoo!’s back was turned, that pit bull bit it in the ass and has left it bleeding out.

    Now, after raising its own attack dog to fend off Google, it tells the employees who nurtured that dog that their dog is weak in comparison with Google and invites the pit bull in to tenderly place it’s mouth around Yahoo!’s neck to protect Yahoo!’s juglar from Microsoft (somewhat of a sheepdog in the space).

67. DotPoet
    

    April 10th, 2008 at 9:57 am

    I love all the hype
    Its like hunting for snipe.
    Run around with a gun
    Come home smelling all ripe.

    This is just a good poker game
    Jerry’s ego is not to blame
    Watch Yahoo’s string bet
    Send MSFT’s moth to the flame.

68. chris (trade2save.com)
    

    April 10th, 2008 at 10:00 am

    Microsoft Yahoo is a done deal - they’re just arguing over money - Yahoo board want an extra few billion - Microsoft knows this and now everyone and his ego is getting antsy.

    Yahoo are probably holding out for 45bn. These deals take months to put together, so talk of News Corp or AOL is just Yahoo singing cry baby to Microsoft - and they’re not buying it.

69. jamie
    

    April 10th, 2008 at 10:01 am

    AOL: horrendous
    +
    Yahoo: partially to totally inept
    /
    Google Search - google ‘managment’
    =
    smoothly running crap

    MSFT iron will
    +
    Yahoo confused weakling
    +
    NewCorp highly efficient.logical
    =
    better chance.com

70. hyloka
    

    April 10th, 2008 at 10:07 am

    Per my earlier comment @68… Microsoft is more like the St. Bernard in the example, lumbering along and probably a bit lost itself, but carrying some whiskey and a first aid kit for Yahoo!

71. matcha
    

    April 10th, 2008 at 10:21 am

    Are we really talking about supporting Microsoft to PREVENT a monopoly?? Wow! Now that’s something.

    Arrington: First, I am troubled by the idea of us having just TWO major search engines. What happens if one company slips (poor management, product issues, etc…)? Then we end up getting exactly what we were afraid of: a monopoly.

    Is supporting a Yahoo merger (with anyone other than G/MS) doing exactly what we want to avoid? And is it premature? Technology changes quickly. Is it too much to hope that Yahoo survives on it’s own?

    On a selfish note, as a start-up guy myself, I really need as many large players out there as possible b/c these are the guys that will buy my products later as I mature.

    Many of you guys are wishing for the end of Yahoo but having one less major technology buyer will have a dramatic trickle down effect that will hurt all technology companies. Yahoo has directly or indirectly driven many of the technology innovations we’ve seen b/c these startups have had a tech-friendly benefactor or eventual suitor.

    Yes, the News Corps are out there, but they are not tech giants who push innovation. They are the end point, the exit strategy, the dead ends of tech companies. It takes a tech innovator to love another one.

    I love Google but I love competition more. And the best way to ensure we have healthy competition is plurality.

    Here’s to hoping Yahoo survives (yeah, I’m a dreamer) independently of both.

    And keep News Corp & AOL out. PLEASE that’s honestly my first hope.

72. matcha
    

    April 10th, 2008 at 10:35 am

    @62 - Ditto. News Corp. Talk about a tech dead end.

73. Michael Martinez
    

    April 10th, 2008 at 10:36 am

    Microsoft needs to stop this nonsense. Destroying either their own search brand or Yahoo!’s search brand through a merger will in no way make them more competitive with Google.

    History shows us that when search engines start merging the front-runner increases its lead. Yahoo! gobbled up Altavista, whose Raging Bull technology was actually better than Google’s technology, and Altavista became a .1% share search brand.

    Ask gobbled up Teoma, a new technology that was better than Google’s, and Ask has failed to capitalize on its superior technology to take market share away from Google.

    Microsoft may have a lot of money but money doesn’t win in the game of search. People don’t like Microsoft, they don’t trust Microsoft, and they don’t believe Microsoft can win in search.

    All Microsoft can accomplish is to destroy one of two brands that help keep search diversified and competitive. Google will continue to improve its real market share and it will be even more difficult for a new search technology to rise up and challenge Google.

74. KwangErn
    

    April 10th, 2008 at 10:43 am

    Yahoo needs to start to think outside the box. In the world of mobility…

75. Alex T
    

    April 10th, 2008 at 10:51 am

    I don’t know about you guys, but I’m just going to go ahead and drop my drawers and bend over to prepare for our new Google overlords.

76. j
    

    April 10th, 2008 at 11:37 am

    When two companies rule one market it won’t be good so I actually want Yahoo to stay alive but it obviously won’t happen.

    I want News Corp in!
    Here’s why:
    It would be a brilliant move on Microsoft’s side when they don’t get in the content business. It’s a USP!
    It’s an advantage they would have over Google.
    I can’t say I really like Microsoft but looking at what Bill does day in day out I have to say it ain’t all that bad.
    They have to let News Corp run that part because that’s what News Corp is good at: content.
    It would be a big blow to Google, imho.
    Those Google guys just can’t be trusted.
    This could easily turn into a PR nightmare for Google when Microsoft shows everyone it’s not right for them to be in the content business and therefor they let News Corp have that part of Yahoo.

77. MistOne
    

    April 10th, 2008 at 11:46 am

    AOL? - come on - Yahoo is far worse off then previously believed - Msoft is not the ones kicking their ass all over place…Goggle is - MSoft is not great but at least they have some idea of what it takes to win, and Duh - they have a stake in FB.
    Mike - v.nice write up - some of your best stuff.

78. MistOne
    

    April 10th, 2008 at 11:49 am

    @71 - nice

79. Trench
    

    April 10th, 2008 at 12:05 pm

    Michael - Competition in the marketplace is one thing, but what seems to have driven Google *this* far (and will continue to drive it for many years to come) is competition within itself.

    It don’t care about what Yahoo! is doing. It don’t care about what Microsoft is doing. It never has. Google cares what Google is doing.

    Google wins because it doesn’t care about winning.

    I know, I know… it cares (it has to), but not the way most corporations care.

    What Google cares about is innovation. It’ll take 15 fails for every win if it has to, because it understands that the one win it scores will be vastly different from everything else out there, i.e., evolutionary and progressive.

    Google has the Richard Branson/Craig Venter mentality.

    So, competition in the marketplace? Google’s never had it really.

    Should they? Would it make them even more competitive and more driven?

    No, I don’t think so.

    Competition is good only when it isn’t at the cost of the social arena within-which the competition is taking place.

    Given its history, if MS gets Yahoo! we are going to see a much uglier, much more proprietary (and obstructed) Internet than we see today.

    I could be wrong… but I don’t think so.

80. chughes
    

    April 10th, 2008 at 12:06 pm

    Great analysis, Mike. I hate to mention but teaming up with AOL??? AOL has also demonstrated poor management decision-making and ability to execute. Why would Yahoo want to beef up with a partner that only brings more of what is clearly Yahoo’s own Achilles’ heel? I agree that they are now acting irrational and not putting shareholders’ interest first and foremost. The next few weeks should be most interesting indeed to see how this chess game unfolds.

81. Trench
    

    April 10th, 2008 at 12:08 pm

    “It don’t care” = It doesn’t care.

    Malfunction in the proofreading database - Trench function fail.

82. Trench
    

    April 10th, 2008 at 12:12 pm

    Edit button for comments would be lovely.

    I must move on, my eyes are bleeding.

83. mobilekick.com
    

    April 10th, 2008 at 12:35 pm

    So funny, I love Yahoo! They spit in the face of Microsoft! This is victory boys! It is about pride, not money!!! Microsoft has stolen everything, and are the least innovative company to ever be created. Once they burn in a fire, Android will reign down SWEET GLORY.

84. Michael Arrington
    

    April 10th, 2008 at 12:39 pm

    Trench -

    “what seems to have driven Google *this* far (and will continue to drive it for many years to come) is competition within itself.”

    errr. huh? competition drives better products and lower prices (good things). companies rarely drive themselves to create better products without competition, and they NEVER lower prices without it.

85. mobilekick.com
    

    April 10th, 2008 at 12:41 pm

    @ #64 I agree with you about MS not having anything to offer except cash (which is WORTHLESS.) However Google owns YouTube, so there would be no reason for them to be worried that people are using it as a new form of search.

86. mobilekick.com
    

    April 10th, 2008 at 12:48 pm

    AND to Michael: Microsoft would try to compete by hijacking IE to lead to search pages w/ ads they got from Yahoo! That is how they think, they are cheeky bastards. They would not offer contextual advertising, so there is really no point in having them aquire Y! Think about it, it would drive OUR revenues down since advertisers could be switching to MS from Google.

    At least if Google controls the ad market it will share with the rest of the internet. You may like your Xbox360 (which btw my friends broke for the 8th time yesterday via RLoD) However you are dead wrong in supporting this deal, especially as a web 2.0 guru you must realise that Microsoft is NOT the future. It is a dying breed, open source is the future and those who do not embrace it will be soo pitted bro.

87. j
    

    April 10th, 2008 at 12:58 pm

    @80
    It don’t care about what Yahoo! is doing?
    It don’t care about what Microsoft is doing?

    Get real!
    Some of those guys working at google are geniuses.
    And every move is a tactical one in an attempt to outsmart their competitors.
    Without those competitors google wouldn’t be what it is today.

    Microsoft needs to buy Yahoo! and get rid of the content biz.
    And let’s be honest here, Microsoft destroyed a lot of companies but so did Google and they are just getting started.
    Without a decent competitor (Microhoo) you end up with something much worse than Microsoft ever was!

88. j
    

    April 10th, 2008 at 1:10 pm

    @87

    Sure they are cheeky bastards and google isn’t?

    You want google to control the ad market? And you think they will share with the rest? How naive of you.
    I for one think Microsoft has a lot of innovative products in the pipeline. It’s not difficult to imagine what they can do with the xbox or with photosynth, silverlight, popfly, … even messenger. They have to put their mind to it and work faster, yes, but to say they are a dying breed is just wrong.
    You’re right when you say they need to open up a lot more.
    They can easily outsmart google when they open up.
    I sure want them to stick around.

89. Steve Ballmer
    

    April 10th, 2008 at 1:33 pm

    AOL always has, and always will, suck.

90. Shawn Farner
    

    April 10th, 2008 at 1:37 pm

    Google owns the ad market because they have the best solution. It isn’t because there aren’t other options. This is nothing at all like the OS monopoly Microsoft has had for quite some time, Windows or bust. Sites are free to use whatever advertising method they choose, and there are a ton of them out there. If PPC price doesn’t seem fair, don’t use it.

    And anyone who wants to see Yahoo swallowed up by Microsoft is, in effect, voting for the destruction of far superior mail and IM clients. You’re also destroying one of the most popular online communities, where people gather to chat, play checkers, fantasy football, etc. All to keep “balance” in the online advertising market? Hell, I think Yahoo could put Google ads on their site and make a killing. Don’t put a nail in Yahoo’s coffin yet.

91. sean
    

    April 10th, 2008 at 1:55 pm

    you got it right on this one!

92. David Dines
    

    April 10th, 2008 at 2:50 pm

    MistOne (# 78 said): “MSoft is not great but at least they have some idea of what it takes to win, and Duh - they have a stake in FB.”

    Don’t assume that the valuation MS used to buy FB was realistic or sustainable. Their business model is still being figured out as they are having trouble making enough money via ads. If they have another snafu like Beacon regarding privacy, then you could see massive defections.

93. Trench
    

    April 10th, 2008 at 3:02 pm

    Michael -

    Competition is good as long as it doesn’t destroy what the competitors are competing for.

    What I was suggesting is that Google has never had real competition, except for what exists within the company itself.

    Let’s not forget that Yahoo actually ran on the Google search engine back in the day - until yahoo realized that it wasn’t the wisest move they’d ever made - so they rebuilt their own.

    Even afterwards, when yahoo acquired Flickr (Google’s one true blunder, not acquiring Flickr) it was still running Google-ads on the site for quite some time… until yahoo finally launched its own ad program.

    And the rest of the ‘04 - ‘06 battles between Google and Yahoo were never really battles - they were just prime examples of Yahoo playing catch-up.

    Google may have tempted towards the act of competing a couple times, but I don’t think it ever really happened.

    Yahoo simply *tried* to make it a competition, but failed.

    As we can clearly see now.

    MS finds itself in an analogous situation presently. They need to play catch-up. MS is trying to acquire Yahoo because it doesn’t want to lose the Internet to Google.

    So, to jump back to your comment - “companies rarely drive themselves to create better products without competition” - I suggest this is one of those rare occasions. Google has done this and shows absolutely no signs of veering off course.

    And - “they NEVER lower prices without it.” - how much lower can you get than free? Gproducts are [for the most part] free. Gmail, for example - if it weren’t for the 2gig Gmail bomb they dropped on the Internet, Yahoo and Microsoft would still be trying to pimp 500mb email accts for 20 bucks a head. (Which is another prime example of Google controlling the marketplace rather than competing in it.)

    If it’s advertising through Google which you are worried will increase in price, I say good. Worry. Google’s primary user-base continues to win, and it will be other companies that have to pay the bills.

    “Competition drives better products and lower prices” might prove to be a failing proverb for future social endeavors. Is what I’m saying.

    It’s not economics we’re talking about here - it’s sociology.

94. 5C
    

    April 10th, 2008 at 3:25 pm

    Here’s another way to the Google counter balance. We can organize a day where we will all stop using Google and their search services. I don’t know… maybe call it http://www.stopusinggoogleforaday.com

    That means e-mail, search, blogger, everything. Power back to the people ;).

95. Scott Rafer
    

    April 10th, 2008 at 5:09 pm

    Ok, that’s a fabulous graphic.

96. moco loco
    

    April 10th, 2008 at 9:16 pm

    MSFT has no other option. YHOO IS its nuclear option against GOOG.

    YHOO can and should play coy. YHOO stock has been bogged down because of internal fat. Yang should use MSFT excuse to shed some pounds, get the stock pumped up in 2 months.

    Do some spring cleaning, get the bureaucrats out.. use the cost savings to keep the brightest, hire away a large team from GOOG with a chance to double their stock in 1 year…many will come.

    In a year, MSFT will have to pay 2x for YHOO, so they better pay 1.5x$31 today to bag ‘em today !

97. Pete W
    

    April 12th, 2008 at 9:39 am

    Article would’ve been better without the op-ed piece at the end.

98. Mark Lambert
    

    May 4th, 2008 at 6:36 am

    Trench,

    You either work for Google or are a really sad case. Folks like you, who believe this is “sociology” and that Google is some sort of humanitarian charity are just almost too out there to be believed.

    Is this *really* your view? HOW is it possible to be so naive?! Well… Google loves you, Ill tell you that much. Because guys like you will give your last ounce of blood and thank them for it!

    This underscores what the author was saying. THIS is the biggest problem with Google. MSFT (or M$FT as dullards continue to find clever) is under an endless microscope, DESPISED by the weirdo geek community and heavily regulated. As such, it has to be *very careful* with what it does. THAT is sociology for you.

    Google could open up concentration camps and guys like Trench would say ‘well they’re better than “M$FT” ‘!!!! THAT is dangerous.