The Wall Street Journal has published a detailed account of Microsoft's talks with Yahoo!, and the reasons for the fall-out. One of the juicier bits is that Ballmer blamed the bankers involved for "screw[ing] everything up."
Perhaps. But reading through the wreckage, it seems much more likely that the gamesmanship on both sides ultimately resulted in both companies losing. Microsoft still lacks a compelling voice on the web, and Yahoo!...well, Yahoo! increasingly does, too.
"They believed that we needed them much more than they needed us," one person close to Microsoft says. "Ultimately, we called their bluff."
Bravo. Now you can both fail together.
Again, I have been hoping the deal would go through because I think it would help Microsoft to make some critical decisions that would favor a more open, pragmatic Microsoft. Microsoft-plus-Yahoo! wouldn't be able to force a .Net future down the web's throat, and would enable Microsoft to innovate beyond its closed platform.
Microsoft needs Yahoo!, not so that it can compete in search, but so that it can compete on the web.
Wow. Microsoft is nothing if not brazen. When you think of Microsoft you normally don't think of these words, at least not together, yet these words came from Microsoft's general counsel, Brad Smith, in response to Google's complaint that a Microsoft and Yahoo! tie up would be bad for the Internet:
Microsoft is committed to openness, innovation, and the protection of privacy on the Internet.
Microsoft? Committed to openness? Microsoft has been committed to destroying openness over the years, and Brad Smith has played an integral role in that strategy, defying the US Justice Department and the world's consumer. I think highly of Brad, but I find this guile to be galling in the extreme.
Google is exactly right in calling out Microsoft's cheek:
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The New York Times hits the nail right on the head: If Microsoft were at the top of its game (as its numbers suggest), it wouldn't need to acquire Yahoo!:
...[Iif its proposed acquisition of Yahoo signals anything, it serves as a confirmation that Microsoft's glory days are in the past. Having failed to challenge Google where it matters most -- in online advertising -- it has been reduced to bulking up by buying Google's nearest but still distant competitor. In many ways, the company has become exactly what Bill Gates used to fear the most -- sluggish, bureaucratic, slow to respond to new forms of competition -- just as I.B.M. was when Microsoft convinced that era's tech behemoth to use Microsoft's operating system in its new personal computer.
of course, just as with IBM, becoming "sluggish, bureaucratic, [and] slow" is not to say that Microsoft is going out of business any time soon. Rather, it's just to say that Microsoft's glory days of market innovations are well past it (not that anyone was doubting this - when is the last time it really did anything innovative?).
But Microsoft can't be happy about failing miserably to compete in the 21st Century, as the Guardian notes, choosing instead to preserve its 20th-century gains:
... Read moreIn the recording of today's Open Season podcast, Dave Rosenberg likened Microsoft's proposed acquisition of Yahoo to the combination of AOL and Time Warner. A bit brutal, perhaps, but one gets the sneaking suspicion that he may be right.
One big question to be answered in such a merger is whose platform prevails? Microsoft's, of course. But Microsoft's platform (.Net, etc.) may be doing well in the enterprise but it's a complete bust on the Web. Try to think of a single cool startup (besides MindTouch) that is building on .Net? Time's up. There really aren't any.
Microsoft is going to need to look beyond Windows and .Net to tap into the fast-rushing flood that is the Internet. Google owns the Web right now, and it does so with open source, open data, and LAMP. Yahoo is a child of the LAMP revolution and could help Microsoft to see the light...if Microsoft is interested in a world where no one entity (and certainly not it) controls the platform.
Think Microsoft has a chance on the Web? I just can't see it. Not unless it gives up its OCD-derived attempt to control platforms. Am I wrong?
Microsoft and Yahoo, together forever. Could open-source offspring be the result?
According to Terry Semel, former CEO of Yahoo, the last time Microsoft approached Yahoo to buy some or all of its search business, Yahoo turned the Redmond giant down. Flat. As for an offer to acquire all of Yahoo, that "conversation has never come up."
"(Yahoo and Microsoft discussed) search and Microsoft co-owning some of our search. I will not sell a piece of search--it is like selling your right arm while keeping your left; it does not make any sense."
But that was then. Now Microsoft has put down a $44.6 billion offer for Yahoo that Yahoo surely can't refuse under present circumstances. Especially since it will give customers a new choice, and Microsoft is all about offering customers choice...or so it says:
Today, the market is increasingly dominated by one player, who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo can offer a credible alternative for consumers, advertisers, and publishers.
Yahoo would be foolish to decline, given its recent travails. What is most interesting to me in all this is how it could drag Microsoft into the next generation of open source.
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