Fresh off the press, it has been verified that Microsoft has made a $44.6 billion bid to buy Yahoo. The specifics still linger, and time will only tell what becomes of this. The story is that Microsoft offered Jerry Yang at Yahoo quietly and he said no. Then, Microsoft harnessed the power of the press and went public with it. It could all be drama with Yahoo declining, but then it could be a very different story.
What does it mean to the rest of us who can't even fathom what $44 billion is like? Well its about more than search. It's probably more about combining resources for online paid advertising and other tools Yahoo has leverage of. Neither of them can really compete at this time with Google on organic search. Although, I will note that Yahoo has made some very positive and dramatic changes in 4th quarter of last year. The problem Yahoo has is getting people to go back to Yahoo. Once clients move away from a service or product, its much harder to get them back than it is to get new ones. Yahoo was once the giant we all used to some degree, and now few of us do. It's a valuable lesson for all of us about paying attention to our clients and users, and the price we can pay when we don't!
What does Microsoft stand to gain in this deal besides a little more of organic search marketshare and online paid advertising?
15.6% combined share of Internet visits (twice Google's)
28% of search (depending on who you ask)
Yahoo adds 35% of the Maps/Local sector (slightly competitive with Google)
10% of online shopping directories
87% of portal front pages
83% of web-based email services (still light years ahead of Gmails numbers)
12% of online news and media
39% of business information content
Flickr would give Microsoft 12% of the photo market
So there is benefit in this for sure for Microsoft. I'm not sure what this means for us but more consolidation in a field very dominated by very large companies. That may not be a bad thing since Google has grown out of control. This would create two mammoth companies who could more directly compete with each other. Whether that will be good or bad is anyones guess.
The problems inherent with search aren't likely to be fixed anytime soon by Yahoo, Microsoft or Google. What we need is more standardized platforming and more intuitive search tools. But what we would hope for is more R&D on organic search results, and more attention paid to users getting the results they are wanting. We have to be fair and say that neither Yahoo or Microsoft has a long history of the latter. We can learn a number of lessons from this. First, that Yahoo paid dire consequences for not paying proper attention to the users of their product. And secondly, a positive note. They diversified and made the best of a bad situation. That is what has kept them going until now.
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