With Google dominating the search and contextual advertising business, “old” timers like Microsoft and Yahoo continue to try and hold their ground. But as the saying goes: together they stand, divided they fall. Microsoft has apparently figured this out because they’ve offered to buy Yahoo for almost $45 billion.
TechCrunch has a letter from Microsoft to the Board of Directors at Yahoo. In it, good ol’ Steve Ballmer outlines their financial strategy to offer stockholders a 62% premium on outstanding shares of Yahoo.
If this isn’t a last ditch effort to take on the Big G, I don’t know what is. The deal has a little bit of that “With our powers combined!” feel to it. Okay, so why should Yahoo cave and join forces with Microsoft? Observe:
- They’ll just keep competing against each other if they don’t, making it easier for Google to come in and pick them off individually.
- The AdSense model is too appealing for anyone to change platforms (at least without any incentives). If they could work together, that’s more clout against Google’s cash cow.
- Microsoft has a weak position on the web compared to Google. Yahoo could be the missing link — but they keep coming up short too. Basically, Y! could become a lot more relevant if they had Microsoft’s wallet backing them up.
Granted, none of those reasons are epiphanies or anything. They’re all pretty obvious. Which makes you wonder: why has it taken so long for a deal like this to hit the table?