Yahoo and Microsoft: Two So-So Tastes that Will Taste All Right Together

  • Share
  • Read Later

By now you’ve heard the news: Microsoft is trying to buy Yahoo for $44.6 billion. But have you managed to get excited about it? No? Not yet? Come on: it would be such a satisfying end to their When-Harry-Met-Sally flirtation. Microsoft’s got a massive war chest — Ballmer recently boasted that he was going to start acquiring 20 companies a year — and Yahoo’s disappointing investors. It makes so much sense, you two!

But despite the dramatic size of the numbers involved, there’s something weirdly uninteresting about the deal. Behold! Two Internet titans, united by their shared desperation and their vague and uninspired corporate strategies!

To be sure: Yahoo has enormous sentimental value to those of us old enough to remember the early days of the Web. Like Google, it was founded by two Stanford graduate students and featured a bare-bones, quick-loading, amateur-HTML home page. But Yahoo is slightly older than Google, and grew faster — it came of age in the late 1990′s, when the “portal” strategy was all the rage: load up your search engine with ancillary media content and services, become a mini-Web of content unto yourself, and watch the page views roll in. And Yahoo did. But being all things to all people tended to mean that Yahoo wasn’t the best at anything, and on the Internet, the best is only a click away.

And while Yahoo was bulking up, Google, Yahoo’s younger, sharper cousin, focused on only two things — search results and ad-serving — and became the best at them. Yahoo wanted users to stay on its site. Google wanted users to pass through as rapidly as possible. Guess which model worked? And guess which example Microsoft followed?

God knows, they still have big numbers these days — Yahoo claims 500 million users globally, MSN 465 million. Yahoo Mail and and Hotmail are the two giants of web-based e-mail — they dwarf Gmail in terms of users — and Yahoo’s purchase of Flickr in 2005 is turning out to have been sharp-eyed. And there would be significant economies if the two companies were to merge (and it’s a good price — take it, Jerry, take it.) But bottom line, that $44.6 billion won’t buy either of them a dynamic strategy. Yahoo and MSN are ultimately brute-force plays, throwing things at the wall and seeing what sticks, then locking users into restrictive interlocking registration systems to keep them around longer. No doubt you can do that, and make money off it, for a long, long time, especially if you’ve got Microsoft’s highly profitable software business around to synergize with.

Just don’t expect people to get excited about it.

0 comments