Upon the proposition that Microsoft made to Yahoo! about a $50 billion acquisition, Yahoo!’s stock price rose. Yahoo! investors are liking the idea because it gives reassurance of Yahoo!’s net worth.
But the real question here is whether the actual users of Microsoft and Yahoo! would actually appreciate such an acquisition.
We already heard about Yahoo! Photos shutting down and forcing users to export photos to Flickr (a Yahoo! property), Snapfish, Photobucket, Shutterfly, etc. through a simple process over the course of the next few months.
If Microsoft were to acquire Yahoo!, then Flickr would become a property of Microsoft. Flickr would then see immense growth because there would be no more Yahoo! Photos and then its services would also be merged with Microsoft multimedia properties.
Yahoo! is still working hard at integrating their own properties within the company and Microsoft is working hard at pushing out products within their Live.com brand.
These are two companies avidly working on rebranding themselves through their own acquisitions and new products so that Google doesn’t hog the spotlight with its own legendary acquisitions like DoubleClick and YouTube.
The Pros and Cons:
Pros (#1-2):
#1 -As a user of the various Microsoft/Yahoo!/Google/AOL products, I find it annoying that I am forced to have 4 different accounts for everything.
I enjoy listening to Yahoo! Music while studying, using AOL Instant Messenger and Windows Live Messenger to communicate with friends domestic and abroad, and using Gmail as my primary e-mail provider. I also use Yahoo! to register domain names as well.
When I think of how many different accounts I have with all of these companies, I just wish that somehow these companies just made it easier for the end user by integrating services amongst each other.
#2 – For anyone that has studied macroeconomics or microeconomics in school at any point, the production possibilities curve (PPC) between both companies will increase. If you do not know about the PPC, I recommend reading up on it and I thank Jimmy Wales for Wikipedia so that you can learn.
The basic idea is that on the PPC curve, for everything in the world there is always a trade-off. A typical comparison is guns and butter. The more guns one buys, the less butter they can afford and vice-versa. The only way that the PPC curve can expand is by an increase in technology or resources. What stands in the way between Google, Microsoft, and Yahoo! is their own terms and conditions (T’s & C’s) in working with third-parties.
A merger between Yahoo! and Microsoft would eliminate the (T’s & C’s) in working with each other. This means that Microsoft Windows Media Player may not have a problem with having Yahoo! Music built-in. That would make a hell of a competitor to Real Networks’ Rhapsody. Or what if the Microsoft Zune had Yahoo! Music built-in, that would make a hell of an Apple iPod competitor, eh?
Cons (#3-4)
#3 -The more a market is saturated with search engines, the pickier a user like us can be. Don’t like MSN search results, use Yahoo! Don’t like Google’s search results, use MSN. Google is already taking steps to dominate search by using its buying power to take over AOL search ($1 billion) and MySpace search ($900 million).
Since Yahoo! would become a Microsoft product, it would be in Microsoft’s interest to have Yahoo! search powered by MSN. Less choice for users.
#4 – The concept of selling out. You know when a company turns its BACK ON ITS USERS BY SELLING OUT TO THE MAN!! Digg, I’m looking in your direction. There is definitely unexpected repercussions for that even though it may not be apparent at first.
Update: Yahoo! is not selling out quite yet though, according to our friends at TechCrunch.
