Could Microsoft Buy Yahoo? - Seven Reasons it Could Happen!
I know this might sound like hype or at least over speculation but I think perhaps it is more then possible, perhaps it may even be plausible?
Recently CNN Reported that both Yahoo and Microsoft were in the process of purchasing land in Quincy Washington. The reasons given were many and no intent by MicroSoft to buy Yahoo was mentioned or even implied but I think perhaps there is something to be considered here.
1. Yahoo is definitely an under achiever in the market. Despite being number 2 in total revenue between Google and MSN they really seem to make a ton of mistakes. They never seem to promote their features the way Google does, they fail to add simple things like a direct way to use their blog search (come on this would take like 10 seconds to do in fact someone actually wrote a bit of code for this) and as a result their stock sits at 10% of what Google trades for.
2. For years MSN has had access to huge amounts of data in using Overture ads on MSN. They know what bidders are paying, click through rate data, etc. They know more then you and I could ever know about Yahoo’s ad program. In fact they must know due to shear volume alone more about the program then any one else other then people inside Yahoo. With the ability of MicroSoft to analyze and process data they may in fact know more about some areas then Yahoo knows.
3. Why would these two giants both choose to buy land for data centers in a small place like Quincy, WA at the same time. The article on CNN reports that low cost land, a cheap work force, plenty of room to expand, etc are driving the decisions. Well, I am sure that is the case but the same can be said for countless small towns across rural America. The fact is either the city of Quincy has one of the best public relations departments in the world that just landed two of the biggest global companies at the same time solely on their ability or the two companies have something going on behind closed doors. You tell me which one seems more likely.
4. MicroSoft has the money! This is huge alone with Yahoo stock at mid 30’s MicroSoft could easily afford to purchase the majority share. I am sure it would be termed a merger but lets face it Microsoft is a much bigger fish.
5. It fits with MicroSoft philosophy. Windows was not created by Bill Gates it was purchased. It makes sense MSN is working hard to gain market share, yahoo has it, so buy it. Further with the new adCenter model applied to the open bid system of Yahoo a real upside could be produced by displaying more relevant ads higher (Something else Yahoo has refused to do). In short MSN would gain market share, all the neat Yahoo programs (that Yahoo has done a lousy job promoting) then put Microsoft’s marketing machine behind it.
6. The time is right to get it past legal channels. Right now Google is hovering around 47% of the market share, Yahoo and MSN would combined hold onto about 40% so no case for a monopoly being formed could be made. If 40% is a monopoly then Google is sitting on one. Plus with Ask.com making a new push and tons of others (Chitika, Kontera, Miva) now in the publisher side as well there would be little from the anti trust world that could stop the merger.
7. True solidification of the demographic targeting market. Right now despite the bugs in MSN adCenter they are clearly ahead in the demographic targeting market. Googles attempt to match this with a modified site targeting approach on the content side doesn’t come close to the capability MSN is developing. Now if you were to add the demographic data that Yahoo has access to but fails to use (think about the user data from yahoo mail accounts alone), to the approach MSN is developing their ability to target demographically would be beyond any current expectations.
Again this article is purely speculative and I have no hard data to back up the possibility but looking at this from a forecasting perspective all the pieces seem to be in place for at least the real possibility to exist. It is certainly something worth considering and keeping an eye on,
Jack Spirko