How Google Got Their Groove Back

Posted May 7, 2008

A few months ago, the hype of Google was overshadowed by the potential of a combined Yahoo! and Microsoft.  This caused Google’s stock to plummet even though the company had a few powerful mainstream initiatives such as OpenSocial and Android.  Google countered Microsoft’s bid for Yahoo! by offering an advertisement partnership to the search engine company founded by David Filo and Jerry Yang.

Yahoo! wanted more money from Microsoft, but that only caused the Windows-maker to walk away from the deal.  Yahoo! is now leaning towards the Google partnership.  Google stock was at $412 per share 2 months ago and now it’s back up to $579.

The awkwardness of the Google-Yahoo! partnership is that Google is willing to help Yahoo! earn more money.  And when Yahoo! makes more money, they can build their own advertising platform to compete against Google.  So why would Google help Yahoo! make more money?

“We are very excited to be participating in this test,” stated Google CEO, Eric Schmidt. “It’s nice to be working with Yahoo and we like them very much.”

In the summer of 2002 former Yahoo! CEO, Terry Semel made an offer to buy Google for $3 billion, but the company wanted at least $5 billion.  Semel walked away from the deal and then Google went public and became worth over $100 billion.

It’s a funny world we live in where refusing to be acquired sometimes works out for the better.  Perhaps Yahoo! refusing to be acquired will have some positive results despite shareholder disagreements.