Who Are The Winners & Losers In The Yahoo/Microsoft Battle?


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By: Andy Beal
2008-05-05

With this weekends news that Microsoft has withdrawn its offer to purchase Yahoo, the news media is having a field day analyzing the "if," "ands", and "buts." Instead of regurgitating the...

...same stuff, lets take a look at the winners and losers here.

Losers

  • Yahoo: It should have taken Microsofts increased offer. There were no other suitors in sight, and Google is hardly its best pick for a knight in shining armor. I dont expect the market to be kind to Yahoo today, and I suspect employees are deflated, not elated.
  • Microsoft: When it made its bid for Yahoo, it waived a big white flag to the rest of us. Microsoft gave up on building its own search share and now it expects us to believe it can go back and waive a magic wand to fix it? If Microsoft had faith in its own ability to build Live Searchs share of internet searches, it wouldnt have bid for Yahoo, would it?
  • Steve Ballmer:  Last week, I speculated that the outcome of Microsofts bid would seal the fate of CEO Steve Ballmer. Unless Microsoft withdrew because its part of a plan to deflate Yahoos stock price, then strike again with a hostile takeover, consider Ballmers days at Microsoft numbered. There have been few success stories for Ballmer recently, and letting Yahoo get away, is his biggest defeat yet.
  • Employees: Employees at Microsoft and Yahoo are now left asking, "what now?" Sure, both CEOs have circulated the obligatory "we can go on" rally-cry, but employees at both companies know theyre facing an uphill battle. At best, expect low morale. Worst case, a mass exodus of the top talent.
  • Consumers: Even though most of us love to use Google, we also kind of hoped to see a serious alternative search engine. We might still have used Google anyway, but some competition would have been good for the end-user.
  • Live Search: We already know that Microsoft is a loser in this battle, but the biggest loser is the Live Search brand. You just know that Microsofties would have loved to have switched their search brand to "Yahoo." Instead, theyre stuck with a brand that will likely never become "top of mind" among search users. Thats a real shame, because, having just returned from Redmond, I can tell you they have the technology"just not the brand.

Winners

  • Google: Perhaps the biggest winner of all. Not only did its two largest rivals lose focus while trying to out-maneuver each other, but Yahoo, in desperation, threw itself at the feet of Google. Not only will both Yahoo and Microsoft lose market share from this power-struggle, but Google will grow, avoid the merger of two competitors, and likely earn all of the paid search business from Yahoo.
  • Jerry Yang:  Since Yangs return to the helm of Yahoo, hes not exactly set the company on fire. However, even though hes not saying so publicly, privately this is a huge victory for him. Sure, he still has to figure out how grow Yahoos revenues, but hes earned some important battle-scars now"and the confidence of the companys board.
  • Short Sellers: Anyone who sold Yahoo short, with the hopes the deal would fall through, is will likely salivate at the sound of todays opening bell on Wall Street.

What have I missed? Please leave a comment with your "Winners" and "Losers."

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About the Author:
Andy Beal is an internet marketing consultant and considered one of the world's most respected and interactive search engine marketing experts. Andy has worked with many Fortune 1000 companies such as Motorola, CitiFinancial, Lowes, Alaska Air, DeWALT, NBC and Experian.

You can read his internet marketing blog at Marketing Pilgrim and reach him at andy.beal@gmail.com.
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