The Pros, Cons and Weirdness of Microsoft-Yahoo

    by Mark Glaser
    February 4, 2008

    i-32db5c40f63f92fe92652334eafd1b7b-Microsoft Yahoo logo.jpg
    After years of rumors, it finally happened. On Friday, Microsoft made its buyout offer for Yahoo. But while that was expected to happen, as both companies have had trouble catching online advertising juggernaut Google, what wasn’t so expected was that Microsoft CEO Steve Ballmer would go all Murdoch on Yahoo with a hostile bid at a 62% premium over Yahoo’s stock price. But unlike Rupert Murdoch’s hostile bid for Dow Jones, Ballmer doesn’t have to contend with family ownership or strange stock structures.

    It’s easy to get wrapped up in the BIGGEST BUYOUT IN INTERNET HISTORY and only consider the business aspects, the antitrust problems, the privacy concerns, Google’s crocodile tears over Microsoft’s unchecked power, and so on. But what about the people who use Yahoo’s various online services, or for that matter, Microsoft’s? What will happen to them in a merger, and how might their experience change?

    We can talk all day about synergies between the two online behemoths, about their search strategy vs. Google, about their share of online advertising, but none of that means squat if we don’t consider the people who visit their sites every day. And because Yahoo and Microsoft come in at #1 and #2 respectively in web traffic in the U.S., this is a very big issue for a ton of people.


    So let’s play out the hypothetical merger that might go through, and consider the pros and cons — and weirdness — that would go along with a new YahooSoft or MicroHoo for the average folks who use their services.

    Pros of Microsoft-Yahoo

    > Better infrastructure. I have used Yahoo Mail and other Yahoo online services for a number of years, and have always been on the cusp of canceling them for one big reason: They are unreliable. I’m not sure that Microsoft’s Hotmail is much better, but I would like to think that the combined company would have a stronger infrastructure.


    > More integrated services. One problem with Yahoo’s disparate services is that they often don’t work well together. What if Microsoft could help Yahoo create a truly integrated service that included productivity applications, email, photos, personalized news and more?

    > A better alternative to Google AdWords. Many average folks and small businesses have done well promoting their websites and services via Google AdWords, but they’ve also noticed that keyword prices have gone up over the years. The hope is that a combo of Microsoft and Yahoo could create real competition in buying search ads.

    > One password for everything. This has been the dream of many online services companies, and Microsoft has probably come closest to implementing it with Passport. With Microsoft-Yahoo, one sign-in could give you access to a LOT of web territory.

    Cons of Microsoft-Yahoo

    > Customer service black hole. While the infrastructure of Yahoo’s services might improve with Microsoft’s oversight, one problem that could just as easily rear its ugly head is poor customer service. If the two companies are working out who does what, who gets axed and how they will come together, odds are good they will not be paying much attention to your own problems with their services.

    > Synergies mean less sites. Do you love MSN Money or Yahoo Finance? There’s a good chance that a merger would mean one of those might go away to cut costs. There are redundancies aplenty in Microsoft and Yahoo sites, from finance to movies to web mail to instant messaging. Your favorite might well disappear, forcing you to take up a rival service you never liked. And don’t even think about what might happen to your personal data in such a move.

    > Yahoo’s openness closed. Yahoo has really tried to open up its platform to more developers, meaning that there’s potentially more innovation in services we like. But Microsoft has traditionally been less open, meaning they might scotch these efforts by Yahoo to be open.

    Weirdness of Microsoft-Yahoo

    > Microsoft-flavored Yahoo. For those people with a strong dislike of everything Microsoft, it will be a hard pill to swallow that all their favorite Yahoo sites are now run from Microsoft HQ in Redmond, Washington. While this problem might be reserved for more hardcore techie types and not the average American, the huge popularity of the Firefox web browser shows that a lot of people have an anti-Microsoft yen.

    > My Microsoft. Following that theme even further, the idea of going to the personalized start page My Yahoo, and considering it’s now owned by Microsoft just seems weird. Will Microsoft be pushing its own favorite RSS feeds and applications onto people? How might this popular site change?

    > Two words: Microsoft Flickr. Yahoo has had a habit of buying up cool social media sites such as Flickr and del.icio.us, and they don’t seem to fit at all into the closed proprietary world of Microsoft.

    Of course, it’s possible that Microsoft might just leave most of the Yaho sites alone, and let them remain funky and quirky and independent — though Microsoft’s track record on that is pretty spotty. Overall, I think the cons and weirdness outweigh the pros for average folks who use Microsoft and Yahoo services, but it all depends on how the merger works out, what services are cut and how they are handled in the future.

    What do you think? Would a Microsoft-Yahoo merger bring good things for users or turn them off? Can the combined Internet giant take on Google? Share your thoughts in the comments below.

    Tagged: microsoft yahoo
    • Im excited about the Microsoft bid. I had always preferred yahoo until this past year having become a Google junkie. I really cant give an analysis but I had a gut feeling that Yahoo was slacking. I hope Microsoft can bring some freshness and innovation to Yahoo and that it keeps Google on its toes.

    • Richard M Nixon

      Hey Mark, a minor point: Most of us who use Firefox do so because it’s better than ie, not because of an anti-MS bias. I would bet that, like me, most Firefox users also use Word over Open Office for the same reason. Yahoo should accept the offer and use their new M$ resources to “provide a credible number two to the internet leader”.

    • Richard M Nixon

      Hey Mark, a minor point: Most of us who use Firefox do so because it’s better than ie, not because of an anti-MS bias. I would bet that, like me, most Firefox users also use Word over Open Office for the same reason. Yahoo should accept the offer and use their new M$ resources to “provide a credible number two to the internet leader”.

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