Business Administration Education Guide

Monday, February 04, 2008

Yahoo Microsoft, Google, AOL - The Web Wars

If you are an obsessed Internet nerd like me you have already heard, read, debated and theorized about the possibility of a Microsoft / Yahoo merger. There are a lot of people who do not want to see a Yahoo/ Microsoft merger, but the most influential “Hell No! That can't go” is none other than Google's chief executive Eric Schmidt. So opposed to the deal was he, that he immediately raised the anti competitive war flag and even called Yahoo CEO Jerry Yang to offer his company's help in any and all effort to squash Microsoft unsolicited $44.6 billion bid for Yahoo.

Let The Games Begin!

What sort of help could Google offer? Lets start with huge amounts of lucrative deals to sell advertising on Yahoo’s search results. It's extremely unlikely that Google could buy Yahoo outright, for antitrust reasons. However, Google could offer a long-term guarantee for advertising revenue on Yahoo’s search pages. This would enable Yahoo with the finances it needs to stay competitive and give some of that money back to shareholders in the form of a share buyback or special dividend (i.e. shareholders would be less likely to say a hardy F you and ditch Yahoo.)

Here is the problem for Google – It is said that Yahoo hates Google. Is that hate strong enough for Yahoo to disregard any Google offers and finally accept a partnership for MicroSurf? Meanwhile AOL is preparing to dump Netscape which is the daddy who gave birth to Internet surfing popularity. Where do they stand in all this?

A lot of people disagreed with Yahoo when they decided to take on Google and fight fire with fire in search engine competition. Industry people felt that Yahoo should have partnered up with other companies so that Yahoo could concentrate on brand advertising, where it had been the leader. Taking that approach would have limited their presence in search advertising and probably would have given Yahoo a much smaller role in the future – which is now today. But that is neither here nor there. As it stands Yahoo has a link fence surrounding them with a couple of very dangerous corporate dogs salivating at the prospect of biting off a rather nice chunk of Yahoo's limping behind.

But what does it all mean and why is it such a big deal?

If Microsoft buys Yahoo, Microsoft will have a dominance in search engine marketing and advertising that would surpass Google. The buy out will take Yahoo's loyal readers, subscribers, searchers and all over to Microsoft – even though they continue to use Yahoo applications. Than again, if Microsoft was to buy Yahoo, would MS intergrade Yahoo's email with Hotmail?

The challenges, the advantages and the integration is much bigger than just email use. If Microsoft did buy Yahoo, Microsoft would acquire a much larger set of online services, a better advertising network, and can better utilize the people who know how to build, brand, and market web products and services that people actually want and use. Yahoo would suddenly be part of an organization with an even more diversified revenue source.

Microsoft takes the long-term view approach and pours money into projects that takes years to turn a profit. One of these long-term projects, hopes and goals is web presence. They say they are dedicated, serious and they are a force that cannot be stopped. However, there are days when I seriously doubt that belief. Management from both Yahoo and Microsoft have not presented a concrete vision of where and how the companies should tackle web presence. That lack of vision leaves us, the users and clients asking if they combine, will they finally be able to create a solid vision that will build loyalty and support and can they follow through with it?

When Microsoft announced that they had made a bid offering, Yahoo stocks soared while Google's dropped. Microsoft has the resources to pay for the development that Yahoo does not. The combination of Microsoft and Yahoo would have the second largest advertising network and a vast array of sites on which to place its own ads. But, where does AOL stand in all of this?

Why so quiet?

The Microsoft's bid revived gossip about AOL's online advertising goals. The main question on mouse click gossip was -- is AOL a target for acquisition and will Google consider purchasing part or all of AOL's (advertising network) Platform A in an effort to balance a potential Yahoo / Microsoft combination?

In November 2007, Time Warner chief executive Jeffrey Bewkes said he would consider selling parts of the company to enhance its "strategic advantage." The Time Warner / AOL merger of 2001 has never lived up to it's promises of grander times and as a direct result, the company stocks have suffered. However, other than yet anther AOL purchased of yet anther technology based media business – this time Goowy Media on February 3rd, 2008, AOL has been strangely quiet. Time Warner has never said that AOL is for sale, but there has been rampant speculation for years.

There is a lot of money and Internet power at stake and if we the pubic could watch the inside corporate drama of all four companies (or at least the 3 biggies) to see how this will all play out it would be better than any reality tv show in the history of television. Better than any celebrity reality tv cat fight and better than any MTV Real Life boy band look-a-like dawg fight. This is what would bring me back in front of the television.

Labels: , , , , , , , , ,