Google jumps into Microsoft-Yahoo soap opera
Posted
Feb 04 2008, 03:32 PM
by
Kim Peterson
Rating:
Corporate drama doesn't get much better than what we're seeing with Microsoft, Yahoo and Google. Wait, isn't this just about Microsoft and Yahoo? It was, until Google decided to spend all weekend on the phone inserting itself into the story.
First, Google CEO Eric Schmidt calls up Yahoo chief Jerry Yang to offer whatever he can to help Yahoo reject the $31-a-share acquisition bid proposed Friday by Microsoft. Aww. What a nice guy. Eric is so helpful!
Meanwhile, other Google execs tried to drum up rival offers, calling companies like AOL to ask if Time Warner was interested. Looks like Google's attempts to pimp Yahoo aren't working: Time Warner, AT&T, Comcast and News Corp. don't appear likely to make any bids for the company.
Then Google's top lawyer goes online to say that Microsoft's bid "raises troubling questions." Microsoft could take over the Internet in the same way it tried to monopolize the operating system and the browser, wrote the lawyer, David Drummond, on Google's blog.
Why so much attention from Google? A combined Microsoft-Yahoo would be the biggest threat that company has ever faced. No, not in e-mail or IM, as Drummond suggests in his post. This is all about search and advertising. And though Google still whips the tails of Microsoft and Yahoo combined in the search business, an alliance would allow the two underdogs to scale up fast. By scale, I mean building a bigger network of advertisers and a bigger collection of sites that can display those ads.
So is it better to get into bed with Microsoft or Google? That's the uncomfortable question Yahoo appears to be facing now. The company is considering reviving past talks with Google about forming an alliance. Google probably can't buy Yahoo because of antitrust concerns, but Google could certainly strike other deals, such as paying Yahoo a wad of cash in return for handling its search business, or selling ads on Yahoo's site.
Yahoo is remaining officially silent, save for an employee memo Yang sent out on Friday. "microsoft’s proposal is one of many options that we’re evaluating in order to maximize value for
our shareholders and employees over the long-term," wrote Yang, who doesn't like to use the "shift" key, apparently. "that’s why we will respond to microsoft after
our board has completed a careful review of all of our strategic alternatives."
That list of strategic alternatives is growing increasingly shorter.
Finally, let's take a look at how the three fared in the market today. Yahoo's share price rose about 3% to $29.33. Microsoft shares dropped less than a percentage point to $30.19. Google shares fell 4% to close at $495.43. It was the first time since August that Google has dropped below the $500 mark.
Disclosures: I don't own shares of any companies mentioned
in this post. And while Microsoft owns this blog, Microsoft does not
control, censor or otherwise have any editorial influence over what I
write.
