Yahoo and Microsoft, or, when is dead really dead?

June 13, 2008

When Microsoft first said it was ending talks to buy Yahoo, many people thought, “well, that’s the end of it.” Zombie movie fans, on the other hand, know that a dead body can get up and walk again. And walk again it did!

But you have to believe The New York Times when it says you can lay the corpse to rest. And that’s just what the Times Dealbook said about Yahoo and Microsoft on Thursday evening:

The talks are dead. Really, this time they are dead. Yahoo is preparing to announce that it has ended its talks with Microsoft over a search-related deal as well as the sale of the entire company, people involved in the discussions said. Yahoo is expected to move forward with an advertising pact with Google as early as today, these people said. How did we get to this point?

Visit the comments section for further hand-wringing.

The Seattle Post-Intelligencer believes in resurrection, however:

But rather than closing the book on the saga, which began with Microsoft’s unsolicited bid for Yahoo, today’s developments appear likely to open a new chapter. Yahoo says the agreement will be non-exclusive and will make it a stronger competitor. However, Microsoft previously raised antitrust concerns about an alliance between the No. 1 and No. 2 players in the search business. The Redmond company has not commented on the deal yet.

Buried in the Yahoo release is another notable piece of news: Google and Yahoo will make their instant-messaging systems work with one another. The Yahoo and Microsoft IM systems already work together.

Yahoo said the Google ad deal represents a revenue opportunity of as much as $800 million a year, and $250 million to $450 million in annual operating cash flow. Yang said the companies don’t believe the agreement requires regulatory approval, but the companies are waiting three-and-a-half months to allow the U.S. Justice Department to review it.

And then there’s just plain nihilism:

Yahoo is now in a four year long deal with Google. I am sure Microsoft is not going to be happy and would follow the legal route. Personally, a deal between Google and Yahoo is any day better than a deal between Microsoft and Yahoo.

One comment

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This is sad for advertisers as more and more of online inventory is now consolidated under Google. Having multiple options is always useful.

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