Microsoft and Yahoo

So Microsoft has thrown it down. After over a year of speculation, they have dropped a whopping $44.6 Billion to buy Yahoo in their bid to play “catch up” to Google. The Yahoo/Microsoft deal is not yet done; it is simply an offer. However, its pretty likely that this will happen, and that Yahoo will be owned by Microsoft at some point. (After a bit of back and forth on price)

This merger has been long rumoured, and is really aimed at combining Yahoo and MSN’s Search products to compete head on against Google’s Search product. There will probably be discussions about combining other areas as an offshoot, but the real story here is search. Microsoft needs to join forces with Yahoo in order to take on Google.

On the content side if this agreement happens, I would suspect that at some point there will be some combination of the Yahoo portal with MSN/Sympatico to aggregate content acquisition between both companies. Google has not competed in this space so this would be a lower priority for them, but they could realize some cost savings by going this route.

As far as branding, I suspect the folks at MSN are probably a little worried this morning. They are not going to get rid of the Yahoo name, but could drop MSN, since that brand is quite dilute already.

We’ll see what happens!


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