The Yahoo Microsoft Merger is a very good idea. Although Yahoo is in some ways a different culture from Microsoft, It seems to me that both of those corporate cultures have become bureaucratic, sluggish, and uninspired when compared to Google’s freewheeling yet very productive approaches. Yet very importantly, the thousands of Yahoo and MS employees are very impressive, and certainly capable of great things as the online world is reinvented on a regular basis.
If Microsoft can pool the innovations of the LIVE project with Yahoo’s superb developer support programs, and hire and inspire more people to have the evangelical zeal of Googlers, it could be a whole new online ballgame.
The big reason this makes sense is actually very simple, yet is seems to be missed by many analysts now ranting about this as a bad idea. It’s a mathematical reason. The traffic from Yahoo+ Microsoft is very substantial. Yahoo had more total traffic than Google before the merger – it just didn’t have as much of the lucrative search traffic and did not monetize the traffic as well. With Microsoft traffic, the combined Yahoo Microsoft company will still initially lag Google in search traffic, but it will have *far greater* total web traffic. This is hugely significant, especially if Microsoft begins to focus more on how important it is to drive potential searchers to search portals inside their own network. Fear of lawsuits and lack of interest in what for Microsoft was a small revenue source led them to failure in the search business. Although the LIVE project was inspired, search share still lags so far behind Yahoo and Google that rolling all this into Yahoo search makes a lot of sense. The combined company would control an enormous share of global web traffic, and it won’t take too much imagination or innovation to redirect this far more profitably than now.
Microsoft remains the overwhelmingly huge legacy player in the information technology space. Google is the clear leader as the new player. Can Yahoo inject enough energy into the monstrous Microsoft machine to compete effectively in the online space? I think there are many potential pitfalls, but on balance you need to do the math, which says that in online footprint, content, and market capitalization:
Microsoft +Yahoo > Google.
News release from Microsoft
Disclosure: I have Yahoo shares. In fact I doubled them on Tuesday! Yippee!