Microsoft’s bid for Yahoo!

The online industry news has been dominated over the past month by Microsoft’s bid to buy Yahoo!. The move came at the start of the month and although Yahoo! quickly rejected the move, Microsoft’s intentions have now been made clear and there has been plenty of speculation on what the likely implications will be for the market and, in particular, the search sector.

Microsoft’s offer was to buy Yahoo! for $US45 billion ‘ a move that was prompted by a struggling Yahoo! who had just announced that they would be cutting around 1,000 jobs and had also reported a 23% drop in profits. Microsoft clearly saw this as a good time to acquire a key competitor who hold a good market share in the US and have also established stronger links with the online industry around the world, especially in Asia.

The acquisition would also give Microsoft access to additional search and pay-per-click technology, plus it would give them an extra foothold to compete against their arch-rivals at Google. Not surprisingly, Google raised concerns about the move, partly as ‘payback’ for Microsoft’s action to stall their own takeover of DoubleClick last year, but also due to genuine fears about the additional market reach and technological capability that this combination of their two main rivals could create.

Subsequently, within the week, Yahoo! rejected Microsoft’s offer as being far too low and that Microsoft were clearly trying to take advantage of their recent poor results by offering to buy the business at a bargain price. Now that Microsoft’s intentions have been made clear they have said that they will continue pursuing Yahoo! through all possible channels and are now likely to make an approach directly to Yahoo!’s shareholders to gain acceptance of a strong offer.

If you’d like to know more about the progress of the Microsoft / Yahoo! bid and how it may impact the search advertising market, please contact us now for more information.

Microsoft is unlikely to offer much more to buy Yahoo!, so now the fate of Yahoo! will largely remain in their own hands as their business struggles to maintain and grow value in the face of a determined suitor. Now that Microsoft has commenced this action they are likely to be persistent to achieve their desired result and news coverage will no doubt continue for some months yet. Speculation and comment will also fill online and offline news sources about what the implications for such a move will be for the online marketplace and what Microsoft will do with Yahoo! if, or when, their bid succeeds. You can keep up to date with developments through Google News.

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