I have been following the unfolding developments regarding Microsoft/Yahoo since they were announced with only mild interest. This is not because the potential alliance would not have an effect on the industry - clearly it would shake things up quite a bit. But there has been actually very little of interest since the initial buyout proposal. Despite the posturing on all sides, events have unfolded in an entirely predictable manner. In the latest development, Nathania Johnson blogged about Yahoo! Goes on a Date with Microsoft, and wondered if there would be a second date to follow.
To me, there is no drama. This is not a first date - it's a shotgun wedding.
The only reason that two companies with such completely different philosophies and business cultures would even consider such a deal is because they have no choice. Yahoo!Search (Overture/GoTo) was an early innovator in the PPC space, but has clearly fallen behind. Microsoft was late to the party, and is once again finding it hard to establish dominance in the Internet arena (outside of its comfortable desktop monopoly).
There may be more posturing in the next few weeks, with crying, chest beating, and histrionics. But the final act has already been written. The only question to be settled is how many goats and chickens Yahoo will get in the dowry. The alternative for both companies in the search advertising arena is unthinkable: to languish and lose market share as perennial also-rans to Google.
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