Google-DoubleClick may bode well for Microsoft-Yahoo deal
With the Google-DoubleClick merger wrapped up Tuesday, Yahoo may face even greater pressure to find itself a buyout partner, according to Wall Street analysts and investors.
The Google-DoubleClick deal presents a greater threat to Yahoo's business of providing both Internet search advertising and display advertising, note analysts. And, as a result, Yahoo now has another issue to contend with, beyond Microsoft's unsolicited megabillion dollar buyout deal waiting in the wings.
"The Google-DoubleClick deal provides further firepower to Microsoft to win over Yahoo," said Mark May, an analyst with Needham & Co. "Microsoft's bid price is the key driver to a Microsoft-Yahoo merger, but increasing competition from Google is the second factor. And within the broader category of competition from Google, the DoubleClick deal is one more factor."
DoubleClick will provide Google a strong entry into display advertising and transform it into more of a full-service advertising company with both display and search--a combination that previously differentiated Yahoo from its competitors, May said. As a result, it may weaken Yahoo's case for remaining independent.
Yahoo investor Eric Jackson, shareholder activist and president of hedge fund Ironfire Capital, notes the merger only strengthens the case that the industry needs a stronger No. 2 to compete against Google-DoubleClick.
"It doesn't help Yahoo's management in any way who are still trying to seek out a white knight," Jackson said. "This doesn't present any other possible suitor for them other than Microsoft and raises the question of how Yahoo is going to better compete against a combined Google-DoubleClick on their own? Wouldn't they be better teamed up with Microsoft?"
A number of Wall Street and industry observers, as well as antitrust experts, had largely been anticipating Google to land the DoubleClick deal and receive regulatory and shareholder approval.
"It's hard to see how Microsoft, or Yahoo, had been proceeding as if this deal (Google-DoubleClick) were not going to happen," said Derek Brown, an analyst with Cantor Fitzgerald. "It's fairly logical to think that one of the reasons the deal was initiated in first place was because of Google's expected acquisition of DoubleClick. It's hard to see how there's a radical change in viewpoint now."
One analyst notes that Yahoo, ironically, got itself into its current predicament of greater pressure from Google by expressing an interest in acquiring DoubleClick years ago. That, in turn, put Microsoft and Google into a heated bidding war. But last April, Google announced it had won the battle with a $3.1 billion bid for DoubleClick.
And while the Google-DoubleClick deal may put Yahoo's business at greater risk, it could help grease the skids on the regulatory front should it ultimately do a deal with Microsoft, said antitrust experts.
"I would expect the Commission to assess the Microsoft-Yahoo deal using exactly the same legality benchmark that it used in the Google-DoubleClick merger," said Luc Gyselen, an antitrust attorney at Arnold & Porter's Brussels office. "In that case, the Microsoft-Yahoo deal strikes me as pro-competitive. It is indeed important for customers to have a few real alternatives to choose from. It does not matter all that much how many alternatives there are on paper. What matters is how effective the alternatives are in the real world."
Microsoft's big bid for Yahoo
Gyselen, who previously served in several senior positions with the Directorate-General for the Competition Bureau of the European Commission, noted that Microsoft's past troubles with the Commission should not affect any outcome in how its merger efforts are treated in Europe.
"Talking from my own experience, each merger or antitrust case is handled on its own merits. Therefore, I cannot imagine that Microsoft's past and current dealings with the antitrust part of the Commission's competition department would create spillover effects into the mergers field."
Elinor Mills contributed to this blog.
Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn. 
www.talkprice.net
Seriously - it'll take time to merge Google and DoubleClick's systems, people, personnel,and cultures...
...just like it'll take time to merge those of MSFT and Yahoo.
I don't see Yahoo getting nervous about it - yet.
Now if Google actually makes it work as they intend (remains to be seen), then yeah, both MSFT [i]and[/i] Yahoo will have cause to get nervous.
But really -I just don't see it as a reason for Yahoo to drop everything, hit the panic button, and rush into Microsoft's arms.
/P
Your points work both ways pretty effectively.
Already Google has announced layoffs for DoubleClick's staff along with their own, typical of any merger. That certainly can't make anyone happy about a merger. At least the Yahoo poison pill will help that out a bit.
OK, we accept your offer to become our dad.
Regards
Yahoo!
What else can Yahoo really do at this point? Nobody else will touch them now execpt Microsoft. The arguments about the EU stepping in to stop the merger are completely out the window with the EU approving the same merger with Google-Doubleclick.
Interesting times indeed.
- Ain't capitalism grand ..?
- by billburke3 March 12, 2008 4:08 AM PDT
- Looks like all this does, in our HO, is keep the waters warm for a Yahoo purchase.
- Like this Reply to this comment
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(6 Comments)Who's left -but- Microsoft, with enough cash to buy Yahoo? And this just makes Yahoo more valuable, doesn't it?
The Team
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