Yahoo's rejection of Microsoft's offer smacks of a face saving attempt by its management and board to look heroic following its despicable behaviour in China.
MSFT is very likely going to prevail with its acquisition since it seems to have the support of Yahoo's largest shareholders. Yahoo's management and board will be able to show it stood up to the Redmond giant, and look like local heroes. And people might forget Yahoo's horrible actions in China that led to ten-year prison sentences.
All that police informing was done to enhance shareholder value. Take a look at at this excerpt from Jerry Yang's letter to shareholders explaining why MSFT's offer undervalues YHOO:
We have the added value of our substantial, unconsolidated investments in Japan and China. We have substantial positions in Yahoo! Japan, the leader in its market, and Alibaba, which is strongly positioned in China, a market with enormous growth potential.
Yahoo lost one of its fiercest critics with the recent death of Tom Lantos, House Foreign Affairs Committee Chairman.
Here is a reminder from: Yahoo! and its looming hiring crisis following despicable acts in China -November 10 2007
Can moral “pigmies” and “police informants” attract the best and brightest talent?
. . . Yahoo! CEO Jerry Yang and its chief lawyer Michael Callahan were called to Washington DC to explain to lawmakers why Yahoo! helped the Chinese government arrest and then sentence for ten years two political dissidents.
Extracts from Zachary Coile’s excellent news story for the San Francisco Chronicle:
“While technologically and financially you are giants, morally you are pygmies,” House Foreign Affairs Committee Chairman Tom Lantos, D-San Mateo, said at the end of the three-hour hearing.
. . .
The hearing began with Yang, who immigrated from Taiwan at age 10, entering the hearing room and bowing and apologizing to the mother of journalist Shi Tao and the wife of Internet writer Wang Xiaoning. They received 10-year sentences after being identified with the help of information from Yahoo.
The act wasn’t enough for Lantos. He called on Yang and Yahoo chief counsel Michael Callahan to turn and face the dissidents’ families, seated in the front row, and plead for forgiveness.
“I would urge you to beg the forgiveness of the mother whose son is languishing behind bars thanks to Yahoo’s actions,” Lantos said. Shi’s mother, Gao Qin Shen, had tears in her eyes as the two executives complied.
That would have made for a great clip on YouTube.
Shi’s crime was to forward a directive from the Chinese censor that journalists must not write about the 15th anniversary of the Tiananmen Square protests.
In addition to moral pygmies, Yahoo! has been called a police informant by Reporters Without Borders.
Yahoo!’s hiring crisis
Competition in Silicon Valley for top talent has become intense. How is Yahoo! going to stay competitive? Especially since there is close attention paid to a company’s ethics and social responsibility among all hires.
Yahoo!’s single engineers already find it difficult to continue their genetic line. Turn up at a party and what do you say? I work for a police informant for the Chinese government?
[Googlers should be careful too, the do no evil giant has been doing its share of informing on its users.]
And as for Yahoo!’s defense that it was just complying with local laws? I’ve pointed out an easy solution several times before: launder the data. Send it to an offshore banking center such as the Caymans Islands, which has strong privacy laws, use a third party service to strip out all identifiable data and then return it in the form of high quality behavioral data. It is the aggregate behavioral data that Yahoo! wants, at least, that's what it says it is interested in. Then when the policeman comes a-knocking the data isn’t going to finger anyone.