Microsoft bids for Yahoo
The bid for Yahoo was interesting to say the least. Software giant Microsoft and owner of MSN putting in a bid for Yahoo shows the concern over the internet marketing business currently controlled by Google.
Both MSN and Yahoo have new advertising options similar to Google’s. The in-text advertising has been extremely popular and profitable for Google, which places these advertisements not only in search results but millions of pages across the world.
Of the big three internet giants, Google has the advantage. Yahoo is considered to be second and MSN runs a distant third. MSN has continuously lost marketshare as Apple operating systems take center stage and other web browsers, such as Mozilla Firefox, strike deals with Google.
It is rare that this happens, a smaller company purchases a larger business. What MSN lacks in marketshare it gains from strong Microsoft OS sales. The financial backbone of Microsoft coding gives MSN some
financially leniency and the ability to make deals larger than the worth of the business.
While this consolidation will throw two internet giants together, the merger will not impact Google as heavily as some believe. The fact is, Google’s content oriented advertising program was the first, and most commonly used program then and now. Further, Yahoo’s profits will add nothing to the coffers of Microsoft, which makes $16B per year in pure profit, compared to Yahoo’s paltry $650Million per year.
The fact is, even after this deal, Microsoft is no better of an investment. The price MSFT is willing to pay for Yahoo is simply too much. Microsoft is even willing to finance part of the takeover which is historically a bad idea.
This deal comes down to nothing more than Microsoft buying Yahoo before Google does. In my opinion, it will be this merger that leads to the ultimate downfall of both MSN and Yahoo. MSN and Yahoo were never in strict competition, the competition is with Google. Contrary to popular belief, I think this strengthens Google by weakening the competition. MSN and Yahoo are dying stars of the internet boom.
