The news is out, Microsoft is making a bid to purchase Yahoo! for just under $45 billion. According to reports, the Redmond software giant believes that combining forces with Yahoo!, the ailing Internet portal and search engine, will turn it's own Internet business around as it continues to hemmorage money in the battle against the 700 pound gorilla named Google. Apparently, the offer is 62% above Thursday's closing price for Yahoo! stock, illustrating Microsoft's brilliance at overplaying it's hand in a desperate attempt to gain some sort web foothold.
While Microsoft may think that aquiring Yahoo! will help it level the playing field, the only people I can see winning from such a deal are the shareholders themselves, and Google. If I was a Yahoo! shareholder, I'd take the deal and split with a fat wallet, much happier than losing my shirt as Yahoo! continues to sink. And if I were Google, I'd be happy that Microsoft is throwing away good money after bad by purchasing an already-bloated, under-performing Internet company.
What Microsoft should be doing is taking a page from the old Google playbook - invest in bright ideas by aquring small companies doing really cool things, as well as tried and true larger ones. This brings in new talent that hasn't fallen into the brain-numbing rut of the mega-corporate-technocracy, fostering the maverick pioneer spirit of innovation, and generally creating an exciting work environment.
To be fair, Microsoft has aquired its share of small companies as well as large, most notably to this blogger the 2004 purchase of GIANT Company Software, Inc., which had a really cool anit-spyware tool until the good old boys in Washington monkeyed with it and turned it into the clunky Windows Defender. The problem is that, while Microsoft may be aquiring talent, it's not aquiring Internet talent, which is what it now hopes to achieve through this unholy union.
Personally, I'd like to see Microsoft make some headway in the Internet battle against Google. Maybe, despite my nay-saying predictions, the Yahoo! executive board and shareholders will approve this proposal and it will be a wildly successful combination and not money thrown down the drain. Don't get me wrong, Microsoft is no friend of mine. But just as Netscape and Microsoft battled it out in the late 1990s, followed by the rematch of Microsoft versus Firefox in the last few years, for browser dominance, and just as Microsoft and Apple have been dualing for twenty-some odd years in the computer systems arena, this battle of Google versus Microsoft is bound to fuel new innovations. This time around, Microsoft is the underdog. Hopefully it can keep Google in check - the last thing we need is for Mountain View's wildest success story to turn into an evil, information controlling, mega-opoly. It's certainly sitting on top of that slippery slope right now.