Why Google would want Yahoo: A few opportunities could make it worth the effort

Why Google would want Yahoo: A few opportunities could make it worth the effort

Summary: Google is reportedly in early talks about a bid for Yahoo. Can these opportunities make the likelihood of regulatory scrutiny worth it?

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That “person familiar with the matter” is talking to the Wall Street Journal again - and this time, that person is whispering tales of early-stage discussions between Google and some potential partners to make a bid for Yahoo.

Now, before anyone starts hollering “antitrust” in a building filled with government regulators, remember that there’s still no formal proposal yet and it’s very possible that Google might not pursue a bid at all. Instead, it seems like we’re at the stage where the key players are just scribbling out their lists of pros and cons about a possible deal.

Imagine the advertising possibilities, what with those hundreds of millions of faithful Yahoos who check in several times a day. But consider the sort of scrutiny that the deal would experience. Are the growth possibilities or the potential dollars-and-cents for the long run worth the efforts of defending the deal to regulators?

Maybe. If I were scribbling some thinking points on a Google bid for Yahoo, here's what some of those random thoughts might look like:

Search: Google walked away from a search advertising deal with Yahoo once before - almost three years ago - after the Department of Justice said it would file an antitrust lawsuit against it. They went big, pared down and still couldn't shake the feds - and so they walked. A year later, Microsoft inked a 10-year search deal with Yahoo. Certainly, regulators will be interested in search and how a Yahoo-Google-Microsoft love triangle impacts it. In terms of Google taking out a search competitor in Yahoo, that feels like less of an issue. Yahoo hasn't been a search powerhouse for years and Carol Bartz, before she was shown the door, had been pushing the "Don't compare us to Google" message at every opportunity.

Content: The other half of the We're-not-Google mantra was a "We're a media company" message that Yahoo backed with partnerships and acquisitions. Going after the likes of AOL, Yahoo stepped up its game in original content - not just YouTube style snippets that Bartz was fond of - but also original news. Remember that news has always driven advertising and Yahoo has millions of eyeballs visiting the site daily. Bartz wanted to make sure that the content they see - both news and advertising - on login and logoff pages, as well as other strategic locations, kept them on the site as long as possible. That's counter to the Google experience that most people have - where they find what they were looking for and then click away to another site.

Advertising: Speaking of advertising, it's always been funny to me that most observers still refer to Google as a search engine when, in fact, Google is an advertising company. Sure, search drives advertising. But Google execs have been saying for years that Google makes money when people spend time on the Web because that's where they're exposed to the advertising. Yahoo's advertising strategy has struggled to compete against a giant like Google, but there's still some value there. In fact, regulators should probably spend more time looking at how a deal might change the advertising business - and industries that are tied to it - rather than focusing their energies on the search issue.

Brand Loyalty: You really can't downplay the significance of the value of the Yahoo brand and the power that comes with hundreds of millions of daily visitors, many of whose loyalty goes beyond what other Web companies experience. (Between email, finance and news, I've already visited a dozen or more Yahoo pages today - all before lunch.)In part, that "stickiness" is due to the company's long-standing presence on the Internet. It was one of the first to offer Web-based email - and, as such, signed up people before Google could. Still, it's kept the offerings fresh and relevant in a changing landscape for communicating with others and sharing information.

Other opportunities: The first thing that popped into my head when I thought about Google getting its paws all over those content relationships that Yahoo has established was how it could impact the efforts around Google TV. Like Apple TV, Google TV is still a work-in-progress. I've long said that I'm a fan of the concept - making both broadcast content and Internet content searchable for a more customized TV watching experience - but Google had a tough time getting the content providers on board. With Yahoo's content offerings, Google TV - and Google News, as well - could get a boost in inventory. Now, if only they could work on that technology.

Some might argue that the time is right for Google to make a bid for Yahoo. The competitive landscape has changed, the technology has evolved, the global economy is in a different state and the political climate in Washington has shifted since the last time the mutterings of a Google-Yahoo deal were heard. Others might argue that the many tentacles of both businesses could prompt a long review of the deal while regulators sift through it all.

I wouldn't be quick to place any bets on a deal happening - but it's good that Google is at least exploring the possibilities. Yahoo has been through a lot in recent years and while it's future might not appear to be so rosy, there's a lot of life left in the company. And if Google (or Microsoft) could get their hands on it - or key pieces of it - the landscape in the tech industry could have some interesting twists and turns on the road ahead.

Topics: Enterprise Software, Google, Government, Government US, Security, Social Enterprise

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27 comments
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  • Still the anti-trust issues would trump every benefit

    If #1 bought # 2 Yahoo, then they would have an undeniable monopoly, with too much internet ad power.
    William Farrell
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @William Farrell <br>There can be no benefit since the deal will be blocked. I'm going to presume Google isn't that stupid and are just using this as a tactic to drive up the price.
      anono
    • Definitely see anti-trust issues.

      @William Farrell

      Not only with Google buying Yahoo, but also with Microsoft, now that they have launched Bing.

      It will be interesting to watch....Got popcorn???
      linux for me
      • Yahoo Search, is Bing.

        So, in essence, there wouldn't be a conflict in joining search services. It's already, basically, one search company.

        Only the rest of the content on Yahoo is unrelated to Microsoft.
        adornoe
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @William Farrell CORRECTION: Bing is #2. It's #2 because of Yahoo!!?
      sandeeppolisetty
      • Bing is still 3rd I believe

        @sandeep.splash
        William Farrell
      • A rose by any other name is still a rose.

        Yahoo search is Bing. Without Bing (and without Microsoft), Yahoo would probably have gone bankrupt a couple of years ago.
        adornoe
    • They could call themselves GooHoo if they do

      @William Farrell
      William Farrell
      • RE: They could call themselves GooHoo if they do

        @William Farrell

        Or try <i>Yagle</i>.
        fatman65536
  • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

    Microsoft is doing everything to force on us wp7, they pay alot of money. I would not be forced to do anything
    Sultansulan
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @Sultansulan
      >>Microsoft is doing everything to force on us wp7

      Really? They didn't offer me money, they didn't put knife on my neck to use WP7.
      Ram U
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @Sultansulan What does this have to do with Google buying Yahoo?
      statuskwo5
  • Does Google really want Yahoo! enough to fight the DOJ and EC?

    Maybe it's a purely defensive move where they are trying to keep Yahoo!, or any significant pieces of Yahoo!, out of Microsoft's clutches. In this case, Google may be attempting to orchestrate an acquisition of Yahoo! by anyone but Microsoft (and, possibly, Facebook). <br><br>Many believe that Microsoft orchestrated Attachmate's acquisition of Novell. Some even believe that Microsoft expressly wanted SUSE to be held as an Attachmate captive. Thus, keeping SUSE out of the clutches of VMWare, Red Hat, etc.
    Rabid Howler Monkey
    • People will always assume much

      @Rabid Howler Monkey
      when they dislike the way that things work out, as opposed to accepting that which has worked out in a particular fashion.

      :|
      Tim Cook
      • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

        @Mister Spock
        Dislike the way what worked out? Nothing happened yet.
        anono
  • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

    Never happen, can't corner the market on search!
    slickjim
  • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

    I was just looking for a way to reach Yahoo to let them know that I am about to give up on a long-standing Yahoo mail account because of the ease with which it can be hacked to send spam. Ever since the implemented Messenger, each time I go to mail I have to shut down a messenger service that is just a long list of prostitutes pushing their wares .Why Google would want to pay anything for a Yahoo that is not interested in what their users think is way beyond me. If they are patient, Yahoo will collapse out of total consumer disinterest.
    baumgrenze
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @baumgrenze
      I have to agree. I suspect at worst they might buy bonds to help another company finance it. To me that would be a waste of money. Yahoo still gets a lot of visitors. Like Skype, it's worth something for the brand not technology.

      I suspect they are only doing this to drive up the price.
      anono
    • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

      @baumgrenze

      I can sympathise as I know many people with Yahoo Mail accounts who have been hacked. However, it is usually a matter of poor passwords. I have had a Yahoo Mail account for nearly 15 years and never had a problem. But, I always used a long password and was careful to use a VPN when in a public access point.

      I would rather take the risk with Yahoo than be guaranteed of being spied on by Google. Google is very good about protecting you from others because they want all your personal information for themselves.
      jorjitop
  • RE: Why Google would want Yahoo: A few opportunities could make it worth the effort

    Now, if google buys yahoo, that would be it. google will be taken to courts. DoJ and 19+ states would sue google, then EU takes the opportunity and screw it further more and more countries follow this because everyone wants a pie. google will be observed by DoJ for a decade and they will scrutinize each and every search result and then only user will get the search response courtesy DoJ. why would Google do that bring bigger headache onto its head? They already have enough headache with Android legal issues and other.

    But what can I expect from Sam other than "unimaginative" reasons to support his theory.
    Ram U