Microsoft eyeing Yahoo!
Microsoft wants to catch up with Google. Google is way ahead in the Internet Search market, and ads linked to text-search. And with Google developing its own internet based softwares and office applications that directly compete with Microsoft Office, Microsoft wants to go on the offensive.
In order to catch up, Microsoft wants to take over Yahoo! and increase its market share in Internet Search and search-linked advertising. Yahoo! is the second most-used search engine after Google.
Microsoft was in talks with Yahoo! last year for a proposed takeover. Since then the push from Microsoft had slackened. According to the report on New York Post, Micorsoft has intensified its pursuit of a deal with Yahoo! after losing DoubleClick to Google last month. Microsoft has apparently employed Goldman Sachs to see the deal through.
Microsoft has an option of catapulting itself into a competitive position by buying 5 - 10 smaller companies. But with the loss of DoubleClick, that option seems to be fading. The only other option is to buy something like Yahoo!
According to New York Post, a deal between Microsoft and Yahoo! would up the combined companies’ share of the all-important search advertising market to 27 percent against Google’s 65 percent. It would also narrow the gap in overall online ads with Google to just 13 percent.
More importantly, a deal would drastically increase the eyeballs, potentially increasing advertising. Microsoft and Yahoo! also feature complimentary offerings on the content side. MSN draws an older audience with its news focus, whereas Yahoo! attracts a younger demographic with its entertainment coverage.
The talks are still in the initial stages and neither company is commenting on anything. Let’s wait and watch how the deal goes through and how Google reacts to it…
UPDATE: Bloomberg reports Yusuf Mehdi, Microsoft’s top internet ad man, as saying that it could take at least five and maybe 10 years for Microsoft to gain significant traction against Google’s search. A Yahoo partnership could make Microsoft a threat right away and may be its only choice to keep up with Google’s acquisitions. In another story, alarm:clock reports that Google is stepping up its efforts to buy the Internet job portal SimplyHired. The purchase makes sense for Google, as it doesn’t have a job site in its folds, when the online job search market is growing rapidly. This buy out news is close on the heels of the Microsoft-Yahoo news. Is it the case of Google trying to consolidate it’s position as the leader in online services and advertising market?
