IDG News Service reports that Yahoo has rejected Microsoft’s latest bid proposal. The reason? Yahoo wants to sell out completely – or not at all. If Microsoft buys that, it is bad news for consumers.
For those who have been off-world during the last few months, Microsoft has been in on-again, off-again negotiations with Yahoo to purchase all or part of the search company. In what seemed like a done deal, Microsoft initially offered purportedly more for the stock than it was actually worth and Yahoo upped the price even further at $33 a share, more than realistic and certainly more then Microsoft was willing to pay. Yahoo did everything it could to resist – even to the the point of making a back-door deal with its rival Google that raised everyone’s eyebrows and could command the attention of the SEC.
Microsoft then walked away from the bargaining table and vowed never to return. But wait, barely a week later they were back, at first behind the back alley, then through the front door, asking to buy only specific portions of the company.
Now Yahoo is doing an about-face, largely thanks to shareholder Carl Icahn and his followers on the Yahoo Board of Directors who actually want to sell to Microsoft for that big Yahoo! shareholder payoff in the sky. Yahoo Chairman Roy Bostock still opposes the idea altogether but Ballmer and Icahn are really twisting his arms. Faced with the prospect of being replaced with MS-Icahn puppets, Bostock and company apparently are desperate and are now willing to talk whole bean.
Friday evening Microsoft sent Yahoo an enticing offer for a partial purchase with a 24 hour deadline. Saturday Yahoo responded with a firm rejection. They won’t just sell part of the company, they want to sell it all.
Icahn is clearly an opportunist here and is thinking of his shares. Microsoft, of course, is thinking about, well, Microsoft. No one is thinking about what this would mean for the industry overall, and most importantly, the customer.
The Microsoft-Yahoo deal is the talk of the media. There are many who think Microsoft Yahoo would be a great combination and would prevent a monopoly that Google is threatening to become. Yet, despite the fact that Google and Search are nearly synonymous, there are other choices out there, for now.
While Microsoft’s current search product is hardly worth mentioning, it is still one more competitor to offer users choice in the marketplace. Once they purchase Yahoo (and I think it is only a matter of when, not if) Microsoft and Google will have the combined market share to render all other search engines essentially nonexistent. The two Super Searches will also have the eventual power to possibly do the same for online advertising, SEO and other marketing venues.
Then there is the question of web applications.
What will happen to consumer choice once a majority of them are owned by two mega giant web companies? Who will control the SaaS market? Who will control access to free or Open Source web apps?
A few months ago our own Todd Hughes blogged about the dangers of a Microsoft-Yahoo deal for Zimbra. Zimbra is an OS application developed by Yahoo and is the only serious Linux alternative for Microsoft Outlook and Exchange. Microsoft has insisted that their primary interest in Yahoo is for the search engine. However, if Microsoft buys Yahoo – all of it – they will then own Zimbra.
Microsoft is not a fan of Open Source. Although they have recently made overtures to the contrary (mostly to help them push OOXML through the ISO fast track to become an Open Standard and for other personal gain) they have also made it clear that they are an enemy of the Open Source movement and seek to control or destroy it on several fronts.
When Microsoft buys Yahoo and has Zimbra, what will they do with it? What will they do with other open source code in Yahoo’s portfolio? What will they do with the patents? They can say anything to appease the public. The question is, given their history of aggression against the Open Source movement and their anti-competitive practices in general, do you trust them?
I don’t. That is why I think this deal, while great for Icahn and Microsoft, is very bad for us.