Yahoo! Microsoft actually goes for a takeover

Yahoo! Microsoft actually goes for a takeover

Microsoft has been searching for a way to compete in search for some time, but its proposed bid for Yahoo! doesn't necessarily mean it's found one.

The end of Yahoo! as we know it? Certainly. The beginning of a new and improved Microsoft? Not necessarily. In some ways the companies share a similar outlook. While Google pushes visitors to other Web sites, Yahoo! encourages visitors to stay within the Yahoo! experience of news, search and so on. Microsoft also likes the idea of a walled garden where people use Microsoft tools, even when they look a lot like everybody else's tools.

A takeover, if it happened, would say two things. It would be an admission by Microsoft that its online strategy isn't working, and that it is needlessly duplicating, through MSN and its Live offerings, the kind of things Yahoo! is doing better, or at least as well. It is unlikely to shutter MSN, but it's hard to imagine the two coexisting in the long term.

A takeover would also be a statement from Microsoft that it doesn't really consider Yahoo! to be a strong competitor vis-a-vis Google. The average observer could probably inferred this from the fact that Microsoft management almost never refers to Yahoo! with the same condensation as it does its other online rival, as well as from the fact that Yahoo! seems unable to generate any of the same buzz, even after its much-publicized redesign less than a year ago.

That raises another question, though: what would Yahoo really offer Microsoft that it doesn't do already? Both can do search, and you could argue Flickr brings some interesting intellectual property, but a takeover might simply represent a way for Microsoft to gain marketshare in the online ad space more quickly than it could otherwise. The other thing Yahoo! might offer is Pipes, its do-it-yourself feed aggregator which may be its crowning innovation to date. What Microsoft would still lack is something on the level of Google Apps, an area of competition that Yahoo! assiduously avoided.

Even if Microsoft is only contemplating a Yahoo! bid to take a player out of the market, that wouldn't be unheard of within the IT industry. Whether it makes either firm more capable of fending off Google is another matter. Even more than the traditional software sector, the search engine business is all about the results. If this transaction happens, Microsoft/Yahoo! better be prepared to deliver some.

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