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My thoughts on the Microsoft bid to acquire Yahoo.

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This is Leo Notenboom for askleo.net.

Because I spent a majority of my career at Microsoft it's no surprise that I've been getting asked what I think of the recent announcement of Microsoft's intent to purchase Yahoo. I don't really have any "inside information" but that doesn't stop me from having an opinion and perhaps a little different perspective.

First, I'm not convinced it'll actually happen. There are many barriers, not the least of which is today's rumor that Yahoo will actually reject the amazingly high offer. One thing I can say is that I don't think anti-trust issues will pose a problem. There are simply too many competitors in almost all of the areas that the acquisition might impact for some kind of unfair advantage argument to be made.

If it does go through though, let's be clear: regardless of how it's phrased, this is not a merger, this is an acquisition.

OK, I'll say it, it's an assimilation.

The term merger might be used from time to time to make people feel better, but I agree totally with the pundit who said "What do you get when you combine Yahoo and Microsoft? Microsoft."

Why? Because while this might be the largest, this is not Microsoft's first acquisition. Powerpoint, Visio, FoxPro, even the ubiquitous Hotmail and several other products are all part of Microsoft not because they were created there, but because they were acquired.

Microsoft has lots of experience with acquisitions.

Should the deal go through one of Microsoft's first issues will be the resulting exodus of Yahoo employees - you know that a high percentage just won't be interested in working for Microsoft. And yes, I would read a lot into whatever actions, or lack of actions, Microsoft might take to retain them.

Some folks think that one problem might be that Yahoo's technology is likely built on open source non-Microsoft platforms. To me that's a non-issue. Microsoft is patient. Microsoft has lots of resources. It may take time, but, and again, I know you're expecting me to say it, so I will: resistance is futile. Hotmail was once in the same boat - it didn't arrive running on Microsoft platforms, but you can bet it almost certainly is today.

I don't have any speculation about why Microsoft is making this move. But I can say this: Microsoft is not above killing projects of its own if it can purchase alternatives that it thinks will give it a greater advantage. You may recall that Microsoft attempted and failed to purchase Intuit, creators of Quicken, some years ago. Microsoft was clearly not above discarding its own product, and the team that went with it, in order to make that happen.

What I will say is this: should the assimilation occur it'll be a long, slow process. Slow enough that we might not even notice until a few years from now when we look around and ask:

"Huh. Whatever happened to Yahoo?"

I'd love to hear what you think. Visit askleo.net and enter 12222 in the go to article number box to access the show notes, the transcript and to leave me a comment. While you're there, browse the hundreds of questions and answers on the site.

Till next time, I'm Leo Notenboom, for askleo.net.

Article C3287 - February 9, 2008 « »

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Leo Leo A. Notenboom has been playing with computers since he was required to take a programming class in 1976. An 18 year career as a programmer at Microsoft soon followed. After "retiring" in 2001, Leo started Ask Leo! in 2003 as a place for answers to common computer and technical questions. More about Leo.

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5 Comments
George Arauz
February 9, 2008 4:41 PM

I dont think its going to matter too much. Google has such a huge following that its not going to make that much of a huge difference

David Ball
February 10, 2008 9:18 PM

I think I still have my "Grace Under Fire" award - it's in a box somewhere. A relic of the failed Intuit acquisition... like the memories of federal agents showing up at my office door, "Please take your hands off of your computer and leave the office." Would the Yahoo acquisition have the same scrutiny? Probably not - there's just too much competition in the search market. Could Microsoft make something special out of the Yahoo acquisition? Perhaps - or maybe they'll just cause a huge party at Google... just like the party the Excel team had when IBM bought Lotus...

Paulo Eduardo
February 11, 2008 7:05 PM

In case Microsoft does buy Yahoo!, what will happen to the millions of e-mail accounts subscribers to Yahoo! now have? How will MSN transfer all those accounts to their Hotmail.com, MSN.com or even the newest live.com?

Leo A. Notenboom
February 12, 2008 9:51 AM

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It's WAY too soon to answer that.

Hell, it's WAY too soon to even be worrying about that. *IF*
the deal goes through it'll take years...

Leo

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Boris Epstein
March 26, 2008 11:20 AM

I just read your article about the potential Yahoo/Microsoft merger and thought you might be interested in a new blog post I wrote about some of the employee exodus going on over at Yahoo these days http://blog.bincsearch.com/?p=153 . We’re pretty tapped into the flow of talent out of Yahoo and thought the world might find this of interest. If you’re ever looking for information that might be helpful for future articles, please feel free to reach out to me anytime.

Boris Epstein

CEO – BINC

www.askbinc.com

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