What Happens If Microsoft Buys Yahoo?

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In a desperate attempt to gain search market share, software behemoth Microsoft is making another bid to buy search giant Yahoo. My first reaction is: Is Yahoo really that stupid? At first glance, this deal doesn't make any sense.Yahoo has such a powerful brand that thrives on community and millions of registered users. Microsoft is a distant third behind Google and Yahoo for search market share, so their interest and objective is obvious.

The question remains: Why would Yahoo harm years and years of brand-building by selling out to a company that has such a bad public persona attached to it? Neither Yahoo nor Google has the privilege of making consumers cringe like Microsoft does.

Yahoo wouldn't sacrifice their company or brand like that. A deal that might make more sense would be for Yahoo to purchase Microsoft's search division, namely the MSN property, but let's be realistic that doesn't make any sense either. What could Yahoo do with MSN.COM? Uh, nothing.

testMerging two conglomerates of this size is quite a daunting task. On the surface, the mutual benefit for both parties isn't obvious. What does make sense is for the two companies to partner together and devise a strategy to hurt Google's search market share. Google has been slapping around Yahoo and Microsoft for going on 3 years now.

testIn March, Google reigned supreme (once again) with a 48% market share in the search market followed by Yahoo at 27.5% and Microsoft at 11%. Here's why this deal may happen? Google has made it obvious that they do not plan to have user-driven search results and that they will always rely on a 'mysterious' algorithm to drive their search results.

testCan you imagine the day when Google gives its visitors the ability to vote up stories or submit new content? Sorry to say it, but Sergey Brin and Larry Page don't have that much faith in us. If Microsoft and Yahoo partner with their search divisions it will be to build a search engine with user-generated rankings and content. Not a search engine like Digg or Netscape, but maybe an entity that puts out initial rankings for keywords and users are given the ability to vote the result up or down.

testIn essence, Digg has one major flaw. Everybody can submit garbage content and pages to Digg. Their database of content grows and grows and nothing else is involved. Although it is very powerful, Digg's model does not allow the content to be "pre-approved" by an editor or algorithm to ensure it is relevant, original and useful. This is where the opportunity lies.

testThat if Microsoft and Yahoo banded together to create a algorithm-based search engine that relied on its visitors to alter the rankings? Imagine that scenario. The algorithm ranks the content initially and the users decide where it goes. Either up or down. None of the major players (except for Netscape) have stepped into this segment yet and I guarantee you Microsoft and Yahoo see this as an opportunity to steal search market share from Google. Netscape has come from obscurity to being a player again because of their switch to this model.

It would be interesting to see Microsoft and Yahoo create a model that relies on algorithms to process the content and the users decide where it falls in the rankings.

testYou know eats at the heart of Bill Gates, Jerry Yang and David Filo each time they hear a reference to "Google It" or "I Googled" in television shows, magazines, popular media and dozens of other sources. It is part of our vocabulary, culture and mindset. That will never change, but a merger and a smart plan from these two giants can put a dent in the public awareness of Google. Another interesting point is that these two companies are perfectly fine on their own.

testThey don't need each other, but they both want Google to go down and that would be the primary reason for a merger. No doubt about it. Rumors have been shot down by both parties and called rampant speculation. The Wall Street Journal is reporting that the talks are dead. Isn't that how all mergers start?

testSomebody leaks it to the public so when the announcement comes, no one is too surprised by the news. Look at what happened with Google and YouTube. It was a rumor and the next week a merger was finalized. Don't be surprised if we see an announcement soon.