Intellectual Property Law

Microsoft Makes $44.6 Billion Bid for Yahoo! Yawn.

By Cynthia Brumfield

In the wee hours of the morning, software giant Microsoft announced a $44.6 billion unsolicited offer to buy ailing online giant Yahoo! The goal is to combine the assets of the two companies so that Internet advertising juggernaut Google faces stiffer competition ahead.

That's about all the thought I plan to give to this possible merger even though the rest of the world is atwirl in analyzing and commenting on this big ticket buyout. Yes, Yahoo! shareholders will get a hefty premium for their tanking shares. Yes, a bunch of people will get laid off if Microsoft achieves its "synergies" and "economies of scale." Yes, a lot of investment bankers will walk away with enough funds to buy their second or third vacation homes.

Aside from that, a merger between Microsoft and Yahoo! is just boring. Neither company has done much that is terribly innovative or interesting for years. What, precisely, will merging these two lumbering, bureaucratic giants achieve that is even remotely interesting?

The WSJ's Dennis Berman nailed it on the head when he wrote

And what exactly, could a combined Yahoo-Microsoft offer? Get braced for a parade of numbers, metrics and justifications. With engineer's precision, Microsoft will drone on about building a "new platform" or "world's largest" or "transformation of the Internet."

Yahoo! has been chasing some kind of coherent strategy to guide its jumble of assets. To date, the company has managed to offer up empty-sounding, techno-management speak that I find unbearable to hear, pushing through numerous reorganizations driven by "efficiencies" and "strategic positioning" and "coordinated cross-functional management teams" and focusing on "optimizing applications" that offer better "contextual relevancy," etc. etc.

Microsoft is little better. As Berman says, Microsoft's Internet forays have "the feel of a rich kid trying to buy his way into the action." This is certainly true of Microsoft's various MSN businesses and arguably true of its wannabe Zune device. (The Xbox, however, is as hot and cool a product that any company could wish to sell.)

So what can these two mediocre but nonetheless rich (at least in the case of Microsoft) companies possibly hope to achieve together that each could not do on its own? As Berman notes, "creating an ever-larger bureaucracy does not seem like a guarantee of anything."

Yawn. I wish I could share everybody's excitement but in the end, a combined Microsoft-Yahoo! is just a snoozer to me.

Full post as published by IP Democracy on February 01, 2008 (boomark / email).