So, as we all know the whole MicroHoo! idea has been called off now, unless you believe the conspiracy theorists who believe this is all still part of Count Ballmer’s plan to devalue Yahoo! (as some of its shareholders go through a set of inevitable legal tantrums) and make it easier to pick up later. I’m not so sure about that myself - after all didn’t the rotund billionnaire say he wasn’t going to raise the original offer for Yahoo!, before doing exactly that? Doesn’t really sound like a bluff, unless you factor in that he knew they were going to reject that too, thus increasing the chances of annoying their shareholders. But then we start getting into the ‘he knew that they knew that he knew’ territory and it all gets dreadfully confusing. Whatever the case, the whole deal has always sounded like a recipe for total disaster to me. So much so, I was kinda hoping it would go ahead just so that I take some perverse pleasure in watching the train wreck later.
No-one I’ve spoken to ‘gets’ the Yahoo! bid at all, seemingly a constant across the entire spectrum of opinion about both companies. I can understand that Microsoft would love to get hold of Yahoo!’s ad customers, and to a lesser extent all the freeloading users required to eyeball said ads (and the services required to keep them sweet), but they can’t have seriously thought that it would be a smooth transfer. The philosophies of the companies couldn’t be much further apart, with Yahoo! very much invested in open source technology and service models, and spritually the culture of the company is very much of a younger, consumer-oriented, more agile and open thinking sort, very different from the business-focussed, shrink-wrapped and closely integrated, keep-it-in-the-company sort of vibe that Microsoft tends to exude. I’m sure Microsoft must have earmarked a bunch of money to use in encouraging key people to stay, but honestly in my experience the very best people aren’t swayed that much by that kind of offer. I think had the deal gone ahead, MicroHoo! would have haemorraged much of the best Yahoo! talent to other Valley companies like Google (or to new start-ups) in the first few weeks, whatever reassurances might be given.
And what about the technology? Yahoo! is again the antithesis of Microsoft here, running their core business on open source stacks. Quite whether the acquisition would have eventually led to that being replaced with equivalent Microsoft technology I don’t know, but a switch would seem like a pointless effort - regardless of your technology preference, the ‘if it ain’t broke, don’t fix it’ rule is universal. But at the same time an entire growth arm of the business running ‘competitors’ products would be somewhat jarring I would have thought, so perhaps their principles would have had them invest in that transition anyway - none of which sounds like a particularly efficient investment.
So actually, I think Microsoft has had a lucky escape here - I think they would have been hugely distracted (not to mention considerably poorer) trying to make a Yahoo! acquisition work. Sure it might have advanced them to some degree, but it surely would have been a messy, inefficient fight which would have given their main competitors - ok competitor - much amusement. The big question is whether they can achieve more on their own. The word is that Steve Ballmer is obsessed with beating Google (you would have thought he’d be content with all the billions he already has, but I guess there’s no pleasing some people), so it will be interesting to see what Plan B is. I hope they’ve screwed the chairs down in his office.