Yahoo-Microsoft?–It Doesn’t Get Any More Epic than This

Computer-giant Microsoft has gone and done it again: it’s gone and made a proposal to acquire yet-another enterprise. This new catch is nothing less than the search engine “Yahoo”—and it wants to acquire it for $44.6bn. It might be too early to speculate on the modalities of this acquisition, but what is clear is that this latest move to take over YAHOO is a way of stymieing the competition that Google offers.

At least that is the rumour going round. You have got to give it to the information society: its 24/7 access to information has made pundits of all of us. Little wonder therefore that the degree of speculation on Microsoft’s motive has been as rife. In the same vein, Microsoft’s move might come as little surprise given Yahoo’s reported falling profits. Reports from the financial media indicate Yahoo’s been approached before, with the latest being in February 2007. The Board of Directors at Yahoo would reject it.

Microsoft Bad Boy to Cash in on Yahoo in Freefall?The situation at Yahoo in 2008 is a different matter altogether. With impending job cuts and profits that are predicted to only materialise in 2009, prospects of a boom for Yahoo are not going to happen any time soon. You can imagine that this has made Yahoo rather jittery. Question is: jittery enough to sell its soul to the devil?

Make no mistake: Microsoft has delusions of grandeur that are so big it’s not funny. The European Commission had been behind the company’s tail since 1999, on account of Microsoft’s decision to force Internet Explorer browser on users, by bundling it with operating systems. Small wonder browsers like Netscape—as I reported last two weeks—have bitten the dust. Norwegian browser Opera had also made similar complaints to Brussels, home of the EU’s executive arm, and the EC lawyers have followed suit by slapping heavy fines on Microsoft. According to a press release on the Commission’s website of March 2004, “heavy” turned out to be a €497 million fine against Microsoft for “abusing its market power in the EU”. This, somehow, has not seemed to deter it.

Microsoft’s Got a Reason
Microsoft sees a merger with Yahoo as a great way of taking over not just search engines (Google accounted for 56.3% of all Web searches in December, compared with a combined 31.5% for Microsoft and Yahoo) , but online advertising, which Google is reported to have handled brilliantly through its AdSense service. Should the deal go through, Microsoft will inevitably make even more money, and seek to compete directly with Google. For some strange reason, Yahoo had not cottoned onto this. It would prove to be its undoing, setting the stage for this explosive development that has left many technology insiders with baited breath.

There is no question that search-engine Giant is cognisant of the developments, for it has made both public and private offers to both castigate the decision (on the grounds of being a threat to competition and stretching it to the point where it states this bid merits scrutiny by worldwide policy-makers), and conciliate Yahoo, by offering to partner it. Yahoo executives have bought time by coming out to say that nothing about the Microsoft merger is set in stone.

Google’s Offer Yahoo Cannot Refuse
Although it’s not great news for Yahoo, insiders predict that Yahoo being subsumed under Google—for all the mixed signals it might give off as conceding to Google its superiority in the search-engine world—would be far less harmful than under Microsoft.

The idea that falling for Microsoft represents the quintessence of the Faustian pact cannot be any clearer when you read reports from users using the Yahoo-owned Flickr photo-sharing site writing in groups created on that service messages to Microsoft stating: “Keep your evil grubby hands off our Flickr.” Reports even indicate that users are threatening to dump Flickr if the merger is approved.

What might probably go against Microsoft is CNET News.com report that a federal district court in Washington, in 2001, ruled that the company had consistently violated the law “by stifling the threat to its monopoly position posed by Netscape, which popularized the Web browser.” The article maintains a suit was brought by the Clinton administration, but settled by the Bush one. The outcome, simply put, is that a federal court and a three-member team of technical experts monitor Microsoft’s behaviour.

It goes without saying that this team will be seriously scrutinising this bid, for that Microsoft is being monitored suggests the manifestation of its delusions have been all-to-real for the past six years.

For the rest of us as users, will it be the grass that suffers as two elephants (Google and Microsoft) battle it out? After all, which Ghanaian is unaware of a Yahoo email account (whether Yahoo.com/yahoo.co.uk is moot); Yahoo Messenger and Yahoo groups? All of these unique add-ons/services have become part of the daily lingo that is part of the information society many of us in the developing countries have come to (sometimes) love and accept. Now, in the event of a Microsoft-Yahoo merger, what will happen to these services?

At the time of writing, Google is offering to bail out Yahoo, whilst simultaneously discouraging it from going into the claws of Microsoft. A partnership between the two has been proposed, whereby Yahoo would outsource its search and advertising functions to Google, so that it could focus on its comparative advantages, which include mobile applications, social networking and content sharing. If this formula were to go ahead, the company would keep its independence.

Battle not Over
With prospects of Microsoft dominance in both the software and internet world, we are going to see many actors—like Google and the European Commission—that would be quick to avert this hostile takeover. Google, because of the threat it would represent in the search engine world—and less email (remember it was only in 2007 that Yahoo’s mail moved from 1GB to unlimited, when Google, since 2004, had been unlimited!) – and the EC, because it’s watching Microsoft like a hawk.

As the web becomes a space where big scrambles are played out, we are certainly going to see more of these virtual mergers and acquisitions. If there was anytime a “Big Brother” was watching, it is now—and it’s on Microsoft.