Microsoft's $44.6 billion bid to buy Yahoo has sparked a whirlwind of analysis, rumor and debate -- and, since Yahoo will be assessing its options carefully, that wind may not die down for quite some time. Here we offer a look at what has developed since Microsoft announced its unsolicited bid Friday morning and try to tell you what it all means.
Does the Microsoft-Yahoo deal make sense?
Lance Ulanoff of PC Magazine doesn't think so. What Microsoft needs to take on Google is a killer Web application -- and, he reckons, Yahoo doesn't have it.
On the other hand, the analysts who spoke to InternetNews.com are a bit more optimistic. Provided the contrasting corporate cultures of Microsoft and Yahoo do not clash, the combined engineering teams could give birth to a new generation of search able to take on Google.
The trouble with that mentality, as the New York Times sees it, is that search is today's big technology. So what? Silicon Valley in general, and the tech industry in particular, succeeds by betting the house on tomorrow's big technology. Writes John Markoff:
[F]or all its size and ambition, the bid has not been greeted with enthusiasm. That may be because Silicon Valley favors bottom-up innovation instead of growth by acquisition. The region's investment money and brain power are tuned to start-ups that can anticipate the next big thing rather than chase the last one.
For blogger Long Zheng, it's mere logistics that make the deal "a big mess." He listed more than 20 areas, from search to widgets to mashups, where Microsoft and Yahoo have overlapping products that could be merged. "Simple branding aside, I think the developers are going to have to work quite a few late nights to integrate what I believe are two monolithic systems together." Zheng concluded.
When, if at all, will the deal go down?
A Yahoo press release indicated that the company's Board of Directors is "undertaking a deliberate review process" that "is fluid and…can take quite a bit of time."
Wall Street analysis compiled by Silicon Alley Insider and MarketWatch suggests that the deal would not spark much protest from regulators, given that Microsoft and Yahoo are coming together to take on No. 1. Articles in CNET News.com and Newsfactor Network said otherwise, as US and European regulators plan to hold hearings on competition and privacy concerns that the deal may raise.
There's also the prospect of a rival bid for Yahoo. The Register indicated that few media companies could pony up the kind of money that Microsoft has offered. Citing Silicon Alley Insider, Charles Cooper of CNET News.com noted that News Corp., Rupert Murdoch's global media conglomerate, was interested in a rival bid. The idea of big media and technology coming together failed to impress Cooper: "We've been there before. It's called AOL-Time Warner."
Another option is a business alliance with Google itself, which, as Reuters reported, Yahoo may be considering. If nothing else, such a deal could drive Microsoft's price above $44.6 billion, which Yahoo feels undervalues the company.
Speaking of Google…What does it think of all this?
Over on the Official Google Blog, David Drummond, senior vice president of corporate development and the company's chief legal officer, said the Microsoft-Yahoo deal "raises troubling questions…about preserving the underlying principles of the Internet: openness and innovation." Echoing the aforementioned article in The Register, Drummond added that he feared the merger of email and IM with Microsoft's dominance of the desktop.
Ina Fried, also of CNET News.com had Microsoft's rebuttal, which focused on the notion that failing to challenge Google would only reduce competition on the Internet.