One of the longest-running tech rumors around is that of Microsoft buying Yahoo! in an effort to become more competitive with Google. The concept of Microsoft as an underdog in any market would have been tough to swallow just a few years back but thanks to Google, anything is possible.
Today, rumors have become reality as Microsoft has made an offer of $31/share in cash and stock for a total of $44.6 billion dollars.
While this deal would obviously provide both companies with massive scale and Yahoo! is the most visited site on the Internet, the problem at Yahoo! is how to monetize this massive web traffic effectively.
I do not have high hopes that Microsoft is an expert in monetizing eyeballs but I do see that the Redmond-based software company has become a much better these past few years than at any time in recent memory.
If they can bring this management skill and momentum to the Yahoo! team and assets, they will be in good shape. The problem could be the scale of this acquisition and merging disparate cultures.
If I were Google, I wouldn’t be scared just yet but I would keep at least one big eye on this new, combined competitor. Assuming that is, that the regulators allow this acquisition to take place. After all, underdog or not, Microsoft is still Microsoft and already has tremendous power and influence in the market that many deem monopolistic. Giving Microsoft the most popular website on the planet has got to raise an eyebrow or two.