Henry Blodget does a plain vanilla analysis of the Microsoft + Yahoo! merger on Sillicon Alley Insider. He agrees with my predictions of disaster but bases his arguments on how difficult it will be to execute on the merger. By the time regulatory hurdles are overcome Blodget thinks it will be at least a year before the deal can happen and in the meantime there will be brain drain and stalled innovation, giving Google a chance to surge ahead.
All good arguments. True for any large merger. But I go further than that. It is a bad deal because MSFT should not be in the online ad business period. Even in a perfect world where everybody dug in and pulled off this merger without a hitch it would be a disaster for both Yahoo! and Microsoft.
Just a few minutes ago Google has chimed in, stating that this merger is "troubling". In other words Google will be rooting for a long drawn out process that leaves the field clear for them to continue to innovate and do an end run around Microsoft. Google realizes that there is a business model in developing useful apps online. Microsoft has missed that point.