Microsoft-Yahoo: Deal of the Weak

“Yahoo is the last old media company, for it operates on the old-media model: It owns or controls content, markets to bring audience in, then bombards us with ads until we leave” says Jeff Jarvis. Yahoo’s a company that clings to the old media model. Old Media will have an end and it’s too bad that they completely disregard bloggers. Robert Scoble says a Yahoo and Microsoft merger will have a negative effect on business.

Isn’t it funny that the moment before the 44.6 billion dollar bid for Yahoo came in from Microsoft Terry Semel steps down? Ha!

Duncan Riley points out what David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer at Google says it raises trouble for their company because “It’s about preserving the underlying principles of the Internet: openness and innovation.” It’s about being open, adaption and creativity. Bloggers enhance and ignite creativity on the web. We engage in conversations that are leading the way of what Jarvis calls an open era.

For example, both Mike Arrington and I have been disregarded by Yahoo. He tried to get an interview for TechCrunch with Yahoo’s CEO, Semel, and he rudely refused to speak with him. When I approached and talked to Semel he had his body guards pick me up, search me and then try to put me in the back seat of a police car. We are just bloggers and want an interview so why does Yahoo have to treat us with such disregard? It hurts Yahoo’s brand.

Sue Decker has done a lot to help restore the Yahoo brand when she stepped up and practically saved the company last year. When I met Sue in 06 she was happy to answer my questions. Even if there are a few shining stars at Yahoo they still are a closed platform that will eventually fail. The opposite approach is seen with Google who takes the new media approach on their open platform. Google has a solid reputation that engages in our conversations. “Google” is used as an international verb to express an action to search the internet. No one can compete with that notoriety.

On one hand, Yahoo is the most popular destination on the Internet. On the other hand, Microsoft has advertisers. Both companies operate on a closed platform that represents everything old media stands for. The new media open platform of Google seems like a mutually exclusive business model to the closed platform old-media model. It’s sort of a “your either with us or against us” mentality thus Microsoft and Yahoo would make a perfect fit. Yahoo isn’t on par with social networking sites like Facebook and they failed to dominate search like Google. From their inability to channel their resources to thousands of lay offs recently Yahoo is unstable. They are lucky to have landed a deal that would be the biggest since AOL and it’s “ill-fated merger” with Time Warner. (link australian).

Microsoft must notice Yahoo’s brand problems. So why do they want Yahoo? Rumors of acquisition have been floating around for months yet apparently Yahoo say’s the offer from Microsoft is new news to them. If Yahoo sells it isn’t going to be to News Corporation or MSN though they are evaluating their offers. Yahoo would be to Microsoft because they are a company with an executive team that thinks like Yahoo’s executive team. Maybe Microsoft’s strategy has been to use Yahoo’s market share as a division of Microsoft. (link) Today, Yahoo is the most popular, however, five years from now without the Microsoft merger, do you think they would be the most popular? I doubt it. Social networks and interactive new media will tear away their audience dismantling their over all size. It’s bound to happen because what goes up must come down. Yahoo’s share price has been on a stready decline since their early days.

Robert Scoble says it will be bad for business and the industry overall. I think it’s going to take more money away from entreprenuers who have to compete. Scoble agrees and says it would give Google the upper hand. He says he talked to one of his friends at google who told him that while Yahoo and Microsoft are spending all their time “merging and acquiring, or whatever you call the process, Google is going to have an opportunity” to move forward. Google will have an advantage in the playing field and they are probably already in discussions about their game strategy.

I like things to be open and to be around people who think that way too. Who want’s to hang out somewhere that’s overrun with a closed model and too many ads anyways? The experience isn’t innovative, open or fresh at Yahoo. It all comes down to openness and their ability to share information. The recent departure of Yahoo’s CEO, Terry Semel who wraps up everything I hate about old media shows he failed. Surprisingly, their failures will be absorbed by giant Microsoft in the acquisition leaving Microsoft with the largest audience share. Will Microsoft kill Google? Nah. Google will stay strong because open is new media.