Home What's Brewing? Ya-Who? Microsoft Bids $44.6 Billion

Ya-Who? Microsoft Bids $44.6 Billion

In the 2008 Internet advertising chess match, a 3-D chess game according to Microsoft CEO Steve Balmer, the Redmond juggernaut has made a bold, strategic move that will either win the brilliancy prize for its depth of foresight and endgame analysis or lead to a self-defeating form of “help-mate,” a position worse than stalemate when one side actually helps its adversary deal a decisive and fatal outcome against its self-interests.

The incredibly high $44.6 billion price tag Microsoft has placed on beleaguered Yahoo could be a masterstroke of tactical precision or the most expensive acquisition of skeptical eyeballs ever imagined given Yahoo’s stagnant PPC system (formerly known as Panama) and Microsoft’s highly promising competitive challenger (known as adCenter). Whatever the differences of the competing ad platforms and technologies, the proposal itself could also provoke a retaliatory response from Yahoo!, the FTC, the antitrust guardians at the DOJ, the European Union, or all of the above.

Clearly, there is nothing that is black and white about the astounding takeover bid which MIcrosoft surprised Yahoo founder Jerry Yang and the Yahoo board with last Friday.

Just how the U.S. Federal Trade Commission will rule on such an enormous deal is anyone’s guess. Yet, the fact that the FTC approved Google’s highly controversial acquisition of ad management firm DoubleClick has already caused consternation from detractors of that alignment. Now Microsoft’s bombshell has some spooked.

In 2007, Yahoo put increasing emphasis on its mission to build a dominant display ad network. Deals with an expanding group of online newspaper publishers, the acquisitions of ad networks Right Media and Blue Lithium, and an agreement to sell, manage, and serve display and video ads on Comcast.net have set Yahoo on a firm path towards competing as a full-fledged display ad network.

Adding Microsoft’s properties and buying power to the mix could be a blow to AOL’s large Advertising.com network, and the last of the independent ad networks, ValueClick, not to mention countless smaller display network players. That kind of Darwinian superiority is Microsoft’s right, provided of course it can pull it off.
Google has already pronounced the marriage of its Sunnyvale search rival with Microsoft a gross injustice. Chief Legal Officer David Drummond weighed in promptly: “Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies – and then leverage its dominance into new, adjacent markets,” he wrote.

“This is a lot like the replay of the marriage of Compaq and Hewlett-Packard, where the idea seemed good but took years to play out,” wrote DeanTakahashi in the SJ Mercury News.

And yet, who among all of us would deny that Google’s dominance in online Search has reached hegemonic proportions and that only a Yahoo-Microsoft alliance provides the necessary counter-balance to Google’s runaway expansion?

One thing is for sure. This deal is going to take a lot of time to come together, merging the various teams, each fiercely protective of their patches, is going to be a long, traumatic affair. [24×7]