IP Democracy: Microsoft and Yahoo! Talking Merger?

The New York Post had a big scoop this morning — Microsoft is “intensifying” its pursuit of a Yahoo! acquisition. The price tag could reach a purported $50 billion, a big bite to swallow even for the Redmond software giant.

Although rumors have floated over the years that Microsoft and Yahoo! were in merger talks, such a deal had been relatively remote — until now. Google’s seemingly unstoppable ad sales engine combined with Microsoft’s feeble attempt to take some part of the search market away from Google has pushed Microsoft to the point that it has hired Goldman Sachs to scope out a deal.

The Wall Street Journal has confirmed that the two Internet giants are “talking.” (BTW, the fact that the Post scooped the Journal is interesting given that the Post’s owner, News Corp., is trying to buy the Journal’s owner, Dow Jones.) Although an interesting development, and if such a merger would take place it would be the blockbuster deal of the year, it’s hard to see how a Microsoft-Yahoo! behemoth could be nimble enough to stay competitive in the fast-moving online ad business. Stay tuned.

Update: This blockbuster story is over before it began. The WSJ is reporting that the talks are no longer active. That’s just as well. General reaction toward the idea of the two big, lumbering companies in a merger was not favorable. As Mathew Ingram puts it, a combination of Microsoft and Yahoo! would be like roping together two icebergs.

They are like icebergs: not only is nine-tenths of them unseen, but they are slow-moving and difficult to steer. Impressive? Yes. Powerful? No doubt about it. But fast, or nimble or imaginative? No. Roping them together would do nothing but compound their problems.

Posted by Cynthia Brumfield on May 4, 2007 9:09 AM to IP Democracy