Micro-hoo vs. Google

By Bill Capece
Collegian Reporter
February 6, 2008

Microsoft, a leader in computer software, has come up with an idea to combine forces with Yahoo. The search engine is also a computer software maker as well as a leading competitor among the Internet communities. The company is known for its online services which include e-mail, financial information and advertising.

Microsoft has put an offer out to buy Yahoo for $44.6 billion in cash and stock. Microsoft has intentions of merging with Yahoo to exceed Google, which does overwhelmingly well in the Internet market. According to CNBC, if Microsoft and Yahoo were to merge, it would be the biggest collaboration since Time Warner merged with AOL in 2000. Both Microsoft and Yahoo are struggling to keep up with the constant change and advancements in their users’ habits as well as keeping up Google’s competitive edge.

Microsoft and Yahoo are right behind in search engine use after Google. If the two companies were to combine, they could surpass Google. According to CNBC, Google still holds most of the Web search market with 77 percent. Yahoo comes in second with 16 percent and, with only 3.7 percent, Microsoft ranks third.

When talk of the assimilation had surfaced, Yahoo's stock soared and pushed it higher than it had reached in months. Microsoft offered Yahoo $31 per share. Analysts believe this combination would do wonders for Yahoo considering its recent poor performance in the stock market.

Microsoft's CEO, Steve Ballmer, stated that he believes the merger could be the “next major milestone in Microsoft's transformation.” However, the deal between the two companies seems to be more difficult than Microsoft expected. There are many frustrating negotiations occurring between Microsoft and Yahoo. There are other concerns including the complexity of combining the two companies from a technological standpoint.

Investors are advising for Yahoo to take the deal, however, it could be a very long time and arduous process until the two software companies can come to an agreement. This is said to be the largest ever U.S. union in the technology sector. Nothing can go through until shareholders and regulators approve it.

On the other hand, people have really considered what actions Google is possibly going to take to prevent this partnership from happening. People think that Google is too large and intimidating to make a bid, but this proves how powerful Google has actually become. Although investors think that it is unlikely for Google to make a bid, it is certainly not out of the question.

Overall, this is believed to be an excellent strategy for Microsoft and this could be a great combination with all of the content that Yahoo has to offer. Microsoft and Yahoo can benefit from each other with their technologies and Internet market shares such as, e-mail and online advertisement sales.

capecew1@lasalle.edu