SEVERAL DAYS ago we explained that Yahoo! had been seized from the inside in the sense that people who are loyal to Microsoft escalated up the ranks of the company while those who acted as barriers got pressured outside the company. Technically, it was a proxy fight (see the links at the bottom for necessary background). Linux should protect itself from similar dangers, which for the most part it does, but Novell's participation in development was never particularly helpful [1, 2, 3, 4, 5, 6, 7, 8].
“We just lost a search engine by this deal. It's sad.”
--Pamela Jones, GroklawThe following links are mostly 'borrowed' from Groklaw, as they very nicely illustrate the stupidity of signing that search deal with Microsoft -- a deal which puts terrible propaganda in place of Yahoo! We wrote about many other issues with Bing.
According to APF, Ballmer said : "It is a win-win strategic partnership and it is a win-win deal from my perspective... Together we can create economic value that's going to benefit Yahoo! shareholders and Microsoft shareholders."
So why did Yahoo's stock fall so sharply?
Pamela Jones inquires: "What if you are not a shareholder? We just lost a search engine by this deal. It's sad."
This is not final however. That deal may still be blocked based on the following analysis from the Wall Street Journal.
The new Internet-search venture between Microsoft Corp. (MSFT) and Yahoo Inc. (YHOO) is likely to face considerable scrutiny from federal antitrust regulators, according to government officials and analysts.
The Justice Department will look at the deal carefully to be sure it doesn't harm competition by allowing two top Internet companies to team up.
“It’s a tremendous vote of no confidence in Carol Bartz,” said Larry Haverty, a portfolio manager with Gamco Investors Inc. in Rye, New York. The firm manages about $20 billion, including 1.6 million Yahoo shares. “This is anything but a boatload of cash.”
CHARLIE ROSE: Is this going to work?
STEVEN LEVY: It has a lot of hurdles. I think the upfront money really isn't the key to Yahoo! The key is, Yahoo! is disbanding their search team, their engineering, and disbanding the team which built their advertising engine to sell ads on search. Now, these happen to be some of the most important aspects of engineering at a company there. And really, if Yahoo! wants to be a top Internet company, it has to have the engineering chops to keep doing that.
So, it's going to miss out on that. And it will save money by not hiring -- having those people to pay, but those are the people you want in your company.
[...]
And the big problem here is that Yahoo! really -- they kind of walked away from the most interesting fight on the Internet right now, which is search. And they handed it over to Microsoft for less than any of the previous deals that were on the table. The four real deals that were on the table going back to the $45 or $48 billion offer in February of 2008, the revised search deal that Microsoft offered, which included $8 billion to buy 16 percent of Yahoo! and $1 billion payment for the search part of the business. The Google deal that got squashed, that guaranteed $800 million in revenues. This deal was the worst of all the deals.