Reuters reports that Yahoo really wants to find a way out of the MS deal, and Google is offering *something* though it’s not at all clear to any outsiders what that something is. Probably a partnership to help Yahoo monetize all their traffic using Google tools and perhaps Google search, though I’m somewhat skeptical that Yahoo can come away from this with a valuation boost near the value of what MS has offered.
If Microsoft is smart they’ll let Yahoo be Yahoo, with contractual assurances that Yahoo can keep on innovating and doing what they have done well for some time in the overall internet and Web 2.0 space. They’ll let Yahoo retain their brand and culture, and basically keep things the way they have been minus the crappy monetization. In turn Yahoo will have a few years – with the newfound clout and help of MS – to turn around the crappy monetization, bad morale, and loss of search share.
disclosure: Got the Yahoo Stocks. Loving the Yahoo stocks.
Google’s concerned that Microsoft could poison Yahoo and make it less open, a state of affairs Google feels created both Yahoo and Google. I’m sympathetic to some degree to their points, though I think Google has more than enough internet opacity in their critical search ranking practices to make me skeptical of all the whining about how Microsoft won’t play fair and keep things “open”.
Google has been more open than most, but far less responsive to ranking problems and search issues than they should be. To the extent MS + Yahoo brings more competition to the space it might help Google see the light and practice more of what they preach about transparency. Just a quick example of the lack of transparency – Google does not share with publishers the “revenue share” percentage for your own site. This would be a totally unacceptable practice offline, but in Google land it’s just another example of the power of a virtual monopoly on search monetization.
Meanwhile, Henry Blodget has some great advice for Yang and Balmer, but it’s clear to me that neither party will view things this broadly. I think there is only small difference in the IT worldview of management at Yahoo and Google, but a world of difference with MS. As a shareholder I’m loving the Google overture to Yahoo which should boost the share price even more. This is a fascinating situation because Google has been happy to watch Yahoo whither on the search vine. Now Google needs to consider a powerful partnership as a defensive attack on the Microsoft search potential after an aquisition. I think this in part relates to a key factor that is underreported: Yahoo’s search quality is now comparable to Google’s according to many objective measures.