Print - Microsoft Shoots Down Yahoo! Merger Rumors

In Las Vegas for the Goldman Sachs Internet Conference, Microsoft chief advertising strategist Yusuf Mehdi said his company can effectively compete with Google without purchasing Yahoo! Mehdi also said that Microsoft already has more users of its Web services than does Yahoo!, suggesting that a merger or purchase of the company, or a purchase of some of its assets, is unnecessary.

"From where we are today, I think we have all the pieces." Mehdi said, noting that the two companies will continue to work together in some ways even as they compete in others. For example, Microsoft and Yahoo ensure that their instant messaging systems interoperate, he said.

Microsoft and Yahoo! have discussed various ways of combining their Internet assets over time, up to and including Microsoft purchasing Yahoo! outright. Recently, reports of the two companies talking again resurfaced, and though these reports were later proven incorrect, the story has taken on a life of its own. Adding fuel to the fire, of course, is Microsoft's continued defeats in the online search and advertising markets. This is not a company that takes defeat well, and Microsoft isn't above purchasing its way into tough markets.

In lieu of a Yahoo! deal, Microsoft has made other moves to shore up its online properties against an ever-aggressive Google. After Google snagged DoubleClick out from under it for $3 billion, Microsoft purchased little-known aQuantive for double that amount. (Mehdi called the aQuantive deal a "game changer.") If Microsoft keeps making lopsided purchases like that, it won't have enough cash to purchase Yahoo! anyway, rendering the entire argument moot. Yahoo! is worth an estimated $40 billion to $50 billion, according to analysts.

I find it odd that the one purchase that would make complete sense in Microsoft's battle with Google is the one purchase Microsoft won't make.

I don't think even Microsoft has that kind of money. Moreover, there's way too much overlap between Microsoft's and Yahoo's services. The best kind of mergers and acquisitions are ones where there is little overlap.

Let's make Microsoft even bigger and fatter than before. That'll help 'em compete with Google. And the amount of cash required to buy Yahoo!? Forget about it. Oh! I know - they can just purchase Google, that'll eliminate some competition right there! Jeez.

"Let's make Microsoft even bigger and fatter than before. That'll help 'em compete with Google." Desperate companies do desperate things.

"Desperate companies do desperate things." you mean like Apple signing with Cingular? Verizon shot their offer out of the water before it even had time to surface for air. XP

Well I'm sure Yahoo! doesn't feel like a worthless pile of crap right now. I'm sure Yahoo! will take it in stride and roll over like a dead dog. Just like they did when they were competing head to head with Google with realistic chances. Yahoo: "Who would have expected to go wrong with giant banner ads saying 'Click teh monk3y!!!! Win a nanner!' on our search pages? Oh well, we can always sit in the corner and listen to Dashboard, maybe Google's servers will all crash and we'll get some monkey traffic, that'd be secks." Do you Yahoo!? Yeah, we don't either. Yahoo! The herpes of the Internet. Steve Jobs' hell, Windows ME on a Gateway using Yahoo Instant Messenger viewing it all on a 60Hz 15" CRT at 640x480.

Yahoo!'s only chance of surviving is through the business they're getting now, and that happens to be through ISP partnerships. most consumers still believe that it's necessary to install extra software in order to use the internet, especially when the ISP package has instructions that say "Install this CD FIRST!". blame that on the days of AOL. XP

"Windows ME on a Gateway using Yahoo Instant Messenger viewing it all on a 60Hz 15" CRT at 640x480." tsk, tsk...I warned you not to buy a system from "Waethorn". :-) <----the all-forgiving wink of snark.

"you mean like Apple signing with Cingular?" Yeah, signing with the carrier that has the most subscribers and the largest network in the U.S. was definitely a mistake--if you apply "Waethorn" logic.

"signing with the carrier that has the most subscribers and the largest network in the U.S. was definitely a mistake" if you want to make a "revolutionary pocket internet device" that runs on a cell network, it would make more sense to choose the smaller, better network, wouldn't it? (that has always been Apple's policy hasn't it?) i smell Apple's 1984 campaign doing a 180. "Windows ME on a Gateway using Yahoo Instant Messenger viewing it all on a 60Hz 15" CRT at 640x480" still more stable than OSX 10.0 released 2 years later. XP