Microsoft, Yahoo, Facebook & the Web
Anyone else getting tired of all this M&A foreplay going on right now? Microsoft and Yahoo! No! Yahoo with Google? Huh. Microsoft and a little bit of Yahoo but no Google? Maybe… Microsoft and Facebook and maybe some Yahoo and definitely no Google? What. Ever. Seriously, just sh*t or get off the pot.
The latest bit of rumor is that Microsoft is now trying to score just Yahoo’s search, not a full acquisition. This seems to have Google worked up about the deal they were working to put advertisement on Yahoo’s search results, you know that one that was the nail in the coffin of the first MSFT/YHOO deal. I don’t know about anyone else, but this seems like a great move for Yahoo. Give up search, give up advertising, focus on the content and user networking platform which is where Yahoo seriously, seriously blows everyone else out of the water - they have more content than everyone and some prominent Web2.0 acquisitions - focus on that. Stop flushing money and focus down the drain of those also ran search and ad units. If Microsoft wants to take over search and pay Yahoo to use their own search over their own content, hell yeah. If they don’t, I’m sure Google would be overjoyed to provide search and advertisement for all of Yahoo’s properties. And then Yahoo can get down to the brass tacks of making their content more platformy and valuable.
Then there’s the even more annoying rumors of Microsoft snapping up the rest of Facebook. I’ve even seen some rumors that the purchase could be valued at $20 billion! That is, Facebook got a raise of $5 billion (33%) between now and when Microsoft first invested. All that despite the fact that Facebook still can’t make money. I don’t think even Microsoft is dumb enough to buy into social networking at that rate. Facebook, despite the lack of a business model, is under siege - with OpenSocial, FriendConnect, FriendFeed and every other new startup in town. Why would Microsoft put themselves into hock now?
I mean, as Scott said, Facebook’s too AOL-like to be worth it. Their walled garden way of operating seems too old school to last for much longer - although it could take down the walls if it wanted to. Scoble thinks this is precisely the reason that Microsoft is interested in them - the walls prevent Google from getting in but if they were part of the Borg Microsoft could provide access if they wanted.
Of course I think there are fundamental reasons why Facebook really isn’t at all like AOL - AOL was an access gatekeeper - you got online via AOL and they tried to intermediate your internet experience with their walls, they could prevent you from getting to the internet and they tried to make their own proprietary copy of the internet for you to use in its place.. Facebook doesn’t prevent you at all, of course, it’s just another stop on the internet and it offers you content that isn’t generally a copy of the internet. It provides a service, connection with your friends, that is valuable and interesting to many. Also, there are real privacy concerns for why those walls are up. So while, I get the highlevel reasons for comparison there are fundamental reasons why it is not so.
At any rate, this soap opera is getting old. Just figure out what you’re going to be doing, all this posturing, bluffing, calling bluffs that actually turned out not to be a bluff is wearing thin. I’d certainly be curious to see what happens to Microsoft if it makes some big purchases that take out it’s war chest of however many billions of dollars. That’s been such a core part of their way of operating for so long - funding projects that lose money year after year till their opponent stumbles and they can finally get a foothold - how do they operate with out it? That will be really interesting to watch.
