Monday, May 19, 2008


Microsoft and Yahoo: 1 Year and lots of hyper later.

Today, not only did I realize we have been terrible about posting to our blog lately, but more critically, that this Microsoft and Yahoo acquistion/merger/partnership story is well over a year old.

Ichan haz Microsoft? We can only hope.

The latest rumors flitting about the news sites and blogs are that Microsoft is interested in taking a baby step and acquiring Yahoo's search business. This interesting tidbit comes on the heals of news that Yahoo has been exploring outsourcing of its paid search business to Google.

Obviously, Yahoo outsourcing their search advertising to Google would immediately kill any potential deal with Microsoft. Ballmer needs that search business...bad. So, one has to wonder if this isn't just a Jerry Yang special aimed at bring Microsoft back to the bargaining table with a boosted bid.

It hardly seems to make sense that Yahoo would outsource their search advertising business to Google considering the investments they have made in the Panama platform in recent years. Yahoo's problem isn't the Panama architecture, it is their traffic quality. Put simply, Yahoo needs more higher quality traffic. I just don't see how Yahoo could expect to be in a superior financial situation by outsourcing search advertising to Google. They could obviously save a bundle by laying off the myriad of folks in engineering, sales and support at YSM, but this would be a short-term gain at best.

And now we have Microsoft apparently interested in 'dating' Yahoo by purchasing YSM. Panama is a superior platform to Adcenter in most respects, but it certainly isn't on par with Adwords from either a usability of efficiency standpoint. And what exactly would Microsoft be buying? YSM in its entirety, including running search advertising on Yahoo's web properties? Would they be foolish enough to purchase only the Panama platform leaving Yahoo still able to outsource the search advertising on their properties to Google?

Regardless of all of this speculation, two things are for certain when and if something happens here. 1). There are going to be a lot of lay-offs at MSN and Yahoo. 2). Google will not lose any sleep.


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