After Microsoft walked away from its bid to buy Yahoo a short while back, numerous people predicted that Microsoft would ultimately be back and Yahoo would have to surrender to the Redmond Empire despite its initial reluctance. But on Friday, Yahoo announced that talks had concluded with Microsoft and the shares subsequently plunged 13% in value.
Recent articles have looked at why the deal failed and specifically focused on Yahoo's deal with Google for advertising, the nail in the coffin for the Microsoft acquisition. The deal allowed Yahoo to run Google's ads alongside Yahoo's search results.
One controversial piece was TechCrunch's Michael Arrington analyzing the failure of the negotiations with Microsoft. Arrington points out that this will ultimately hand much of Yahoo's core business to Google and that "Yahoo's hatred of Microsoft runs so deep that they were actually...willing to destroy the future of their company just to keep it independent a short while longer."
An article by John Naughton in Observer News Service accuses Yahoo of being a "groupie to Google's Mick Jagger" and points out that the deal included a hefty escape clause for Google if the deal proved less than lucrative but that the sum was a tiny threshold compared to Yahoo's quarterly revenues.
In Investor's Business Daily, Patrick Seitz reports that Redmond appears to be working on numerous smaller deals to replace what it had hoped to do with Yahoo. It signed a deal with Hewlett-Packard to boost distribution of its Live Search offering. It also put in place an offering for "ad-funded cash rebates" for customers who use Live Search to find and purchase products from specific merchants. He points out that the deal hurt Microsoft's chances of taking on Google but also harmed Yahoo's future in the long term.
Not everyone predicted doom and gloom by the developments, however. Fred Wilson predicted that Yahoo would be spurred to clean house and get out of businesses it shouldn't be in and possibly undergo a change of leadership. In addition, Tim O'Reilly pointed out that not everything was about search and that Google's search dominance wasn't the end of the world and Web 2.0 was the bigger thing.
In fact, according to some reports, the deal is only "mostly dead," as an analysis in TheStreet.com put it. CNET interviewed several analysts who also said not to rule out the deal just yet.
Nice to see you linked to the O'Reilly piece. I think the Yang hatred is getting extreme, and blogged on that today:
http://cparente.wordpress.com/2008/06/18/jerry-yang-hatred-reaches-hysterical-levels/