Thursday, April 10, 2008


As much as the laisser faire concept is attractive in the world of business, and most things human, there are situations that require some analysis from a perspective other than the all consuming kick your ass ego, … or dollar. From India to Cupertino, media and financial players are weighing in on this mammoth deal. Mammoth, because how else do you describe an acquisition this enormous and with such repercussions. Those repercussions are the concern, … for the rest of us.

The monetary value of the transaction is only relevant to Yahoo and Microsoft shareholders who will find themselves deciphering the confusing pros and cons of the upcoming proxy fight. Recriminations have started and will continue until Microsoft gets its way. Some Yahoo shareholders and all its employees are already conflicted with their Silicon Valley we-hate-all-things-Redmond percepts, but employees who rightly fear for their jobs, will not really be included in the circumspect algorithm that consummates the deal. The dollar will rule, and Microsoft can purchase just about anything it wants. IMHO, Jerry Yang and his colleagues appear to be receiving bad advice or are simply listening to the wrong voices in their negotiations with the giant. Current publicly vented recriminations indicate a serious lack of strategic thinking and direction when both are needed against Gates and Balmer, two of the best in business. Remember what they did to IBM?

Yahoo is getting what can only be described as threats from Wall Street experts claiming that if it doesn’t deliver 12 percent or better in its first quarter results, it’s management will have no credibility. This is an inappropriate perspective on credibility. Jerry Yang and David Filo built a great company. Their hired help and board members in recent years have let them down.

Discussions with Time Warner for a merger with AOL will lead nowhere and AOL offerings have shown little if any creativity, or insight into human nature since it’s inception. Numerous countries will also weigh in on the conglomeration including China, whose recently legislated foreign ownership laws will bring scrutiny. They’re already looking at Microsoft sideways which will increase with Yahoo’s 40% stake in the Chinese e-commerce portal. China will probably have some difficulty given the insurmountable obstacles to the fencing of internet sites and access. Other antitrust clamor is a red herring used as leverage, and Microsoft is well versed in that game.

Limiting the public’s options to Google and Microsoft, beyond any antitrust restrictions, is a stifling prospect. It has been posited that being fed by the Microsoft cash machine will provide Yahoo with endless opportunities for real growth. Such speculation ignores the fact that Yahoo is already a significant company with cash and stock to finance, within reason, anything that it might creatively set out to accomplish. Its bigger challenge over the recent past has been a confusion of what strategies to follow for advancement and innovation.

As Google makes a bee-line for the mobile environment, Yahoo gets entangled in a game that Wall Street has no wherewithal to adroitly consult on. From inside the battle, it has become obvious that this epic battle isn’t about conflict between corporate cultures but is now a destructive collision of egos. The Microsoft offer, currently valued at $42 billion, is more than fair value, and Yang’s focus shouldn’t be on price of the deal, or on hubristic confrontations with Balmer. His attention should be on the nature of the ensuing structure dictating the homogeneity between the two companies in a conglomeration.

We can assume that this discord will undoubtedly conclude as Microsoft wills it, however, the amalgamation does not bode well for the rest of us in World Wide Web Land. As users, observers and enthusiatic stakeholders in the historical collision, we expect development, advancement, and creativity from all players, particularly the large ones. Concentration of control and influence will only reduce the breadth of innovation. Pretending that Yahoo will be encouraged to pursue its dreams and ingenuity independent of Redmond interference is ignoring history and common sense. Microsoft senior management will pull all strings under its control, as it is its right to do. … Wish it weren’t so.


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