

Ask YC: How happy will you be if MS takes over Yahoo and do you think MS will benefit? - ideas101

My take on this is MS will fail horribly in the long run if it doesn't consider wish of other 2 important stakeholders (i.e yahoo employees and end users/customers) --- i'm very uncomfortable to see almost all the time that m&#38;a is all about increasing value of the shareholders and not about increasing value for other 2 stakeholders. How far you can go if employees and customer are unhappy with the merger? which i think would be the case in this tussle of yahoo-ms merger ...
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brk
Well, I don't really use either of their products, so I don't have a strong
feeling about the merger.

I think that the fall of Microsoft is eventual anyway, no company has
historically maintained a strong dominance or monopoly in their industry over
a long period of time. As things continue to change in the computing market,
Microsofts sheer size works more against it than for it. We've all probably
heard the story about how Microsoft almost missed the Internet in '95 or so.
That one was easier to recover from than sinking billions of R&D dollars into
a desktop app development when things suddenly go to apps in the cloud, or
some similar thing.

At this point, I don't know that Microsoft can really benefit from any
significant merger. They may however be able to fend off the inevitable for
another few years with some strategic acquisitions though.

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ideas101
i think u r right in the sense that i would rather acquire 10 different
futuristic companies than just one jumbo that can fail terribly ... it would
have been better if ms bought something like social networking, voip, cloud
apps, virtual s/w for desktop etc. companies than just one single content
provider.

~~~
tomh
what about the properties underneath the yahoo umbrella such as flickr,
delicious, etc? what about the technology underneath the yahoo user interface
javascript libs? don't forget that yahoo has diversified itself in media, for
better or for worse, and the media diversity is something m$ft lacks.

~~~
justindz
I fear for my Flickr :-\

Seriously, though, I think Microsoft is also buying managers and developers
who made better moves in many of the areas where it has fallen behind. YUI vs.
"Atlas" (is it still called Atlas) for example. They get some good properties,
but I think they are also looking for skills they apparently haven't had.

The question is, will they crush/warp/bend them or crush/warp/bend themselves?

~~~
jamesbritt
"I fear for my Flickr :-\"

I recall hearing that from may people when Yahoo first bought Flickr.

Having to use a Yahoo ID to use Flickr was enough to get me to stop using it.
Too damn annoying.

~~~
brlewis
Are you a photography enthusiast, or were you just using flickr for personal
photos? Where did you go after that?

~~~
jamesbritt
Personal photos.

I've been giving Picassa a whirl.

There's a part of me that just dislikes the "winner takes all", eventual
walled-garden effect.

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simplegeek
I will not be happy at all because Yahoo might loose hackers like Doug
Crockford and alike. The way he bashs Microsoft while he speaks is a clear
indicator that he (or some others) might refuse to work with Microsoft.
Moreover, if a company cannot market a product while spending whopping 6
Billion on research & having people like Ray Ozzie is doomed to hit a huge
failure when it comes to Internet applications.

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amour
MS will die a slow and painful death over the years if it doesn't change the
way it does business and treatments towards its customers and other
developers. MS also needs more innovation and invention rather than milking
their ancient products. If MS takes over Yahoo and force its brand on Yahoo,
it will take Yahoo down with it. Reinventing their image and mission as a
company is probably a better and cheaper way than forcing to take over Yahoo.

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tom_rath
I'll be delighted!

Combining Yahoo's high traffic with Microsoft's reasonably good ad management
system would finally produce a competitor to Google Adwords (as outlined here
a few days back: <http://news.ycombinator.com/item?id=154184> )

Microsoft hasn't been able to build Live.com traffic and Yahoo is clueless
when it comes to building a useful ad management system. Putting the two
together should resolve both problems reasonably quickly.

~~~
aristus
I doubt very much that it will go well. I used to work for a small Overture-
like search marketing company. We were purchased by Yahoo about the same time
Overture was. Overture's bosses took over that end of the business, to the
extent that we were given @overture.com email addresses. Then they sucked away
a large percentage of developer resources for years to do their total rewrite
called Panama, adding features we'd had in Brasil (Brasil!) for years. Our
code got drowned in the bathtub, except in the countries and languages that
OVT couldn't bother to support.

So there's an example where better code and cheaper infrastructure, already in
hand and ready to go, lost out to Overture.

So you think Microsoft will fare any better with that maligant tumor? MSFT's
tech is nice, but it's not (repeat NOT) ready for anything other than US
English + Europe.

It's a disaster in the making.

~~~
tom_rath
Yes, I think Microsoft will excise that 'malignant tumor' completely. Why
would MSFT keep it? They want Yahoo's traffic (and all the bright, shiny bits
everyone is worried will be destroyed), not Yahoo's failed business model
implementation.

~~~
aristus
There's a good chance MSFT would want to excise it. I doubt their ability to
do it, politically. OVT is entrenched. Too many high-up people (including
Jerry!) would have to admit they were absolutely wrong and let an acquired
company take control of the cashflow.

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jeremiah
I think you are absolutely right about pleasing the stakeholders, especially
because good engineers are hard to find and if the engineers leave en masse,
there will be problems.

I see the culture of the two companies as incompatible. Yahoo! is a FreeBSD
shop, they use lots of Free Software, MySQL, etc. Is Microsoft going to rip
and replace all those servers? If they don't, they are saying FreeBSD and Free
Software is better than Windows. I see this problem as being a very expensive
issue.

Secondly, Microsoft has never borrowed money before to purchase a company.
They were having Bear Stearns help them with this purchase, and while Bear
Stearns is gone, they still will need some serious capital and will go into
debt. This will change their culture, their ability to attract investors, and
the bottom line.

~~~
ideas101
the cultural clash, the technology clash, the reputation clash will cost ms
dearly ... also employees who dont leave will stay there with the lowest moral
which is even more dangerous than an employee leaving the company ... this
will also create internal politics about who's right regarding selecting a
technology and/or new apps and business.

Anyway this would be fun to watch as 2 different giant animals (dinosaur and
elephant) coming together to rule the jungle - while all the other animals
like lions, tigers, leopards will try to create an even game to ouster these
giants.

~~~
okeumeni
I do not think MS will attempt to merge teams and technologies; they are
smarter than that, not at least for a mid term. I think they will basically
run two companies and go for the main prize: ads base customers and search
traffic. They will keep both engines separate for a while and consolidate the
ads business in general into a giant force in revenue making; this will be the
main problem for Google.

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okeumeni
I will be very happy for two reasons: -First for the shareholders, it will be
a wave of fresh air for their equity which has been plunging in value. -It
will be a good for the search industry; it will diminish the myth around
Google and its monopoly, create room for innovative solutions in search
technology and for new companies to grow.

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inovica
Microsoft have been buying small innovative companies for some time without a
significant effect it would seem. I'm not sure that buying Yahoo! would make a
great deal of difference to them either as I feel that Yahoo! is too big
currently to be part of the next-phase. I might be wrong though - it has been
known once or twice before!!

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smalter
a small point: most yahoo employees/end users/customers are likely yahoo
shareholders as well. so the creation of value for yahoo shareholders will
benefit them as well. in any case, they can get a voice proportional to their
share in the company.

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ideas101
sorry, i didn't mentioned who are the shareholders? when m&a takes place its
all about biggest shareholders who are mostly private equity or big venture
funds and not the retail shareholders like you and me ... while customer and
employees are located world over - for example a yahoo email user in a small
village of china should also be considered as a value stakeholder because
those type of users are in millions and in the same way an employee in the
yahoo's r&d dept. in india is also as important as any other stakeholder....
so what would happen to ms if these 2 stakeholders switch their loyalty to the
competitor (say google) after merger ???????

~~~
tomh
I think 'yahoo email users in china' might applaud the merger:

Yahoo Says It Gave China Internet Data: Journalist Jailed:
[http://www.washingtonpost.com/wp-
dyn/content/article/2005/09...](http://www.washingtonpost.com/wp-
dyn/content/article/2005/09/10/AR2005091001222.html)

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snorkel
I use neither of their products but hope that Yahoo's shareholders will tell
Microsoft to go urinate in a direction opposite the wind.

