By Dan Kennedy • The press, politics, technology, culture and other passions

Microsoft’s Yahoo bet

The headline at says it all: “Microsoft Bids for Yahoo: Do Two Losers Make a Winner?” And if you read Betsy Schiffman’s article, the answer would appear to be “no.”

Microsoft’s proposed $44.6 billion acquisition of Yahoo is the biggest media story of the still-new year. Yet news organizations seem to be straining to imbue this with the excitement they think it deserves. When it comes to the “what does it mean?” graf, everyone is coming up short. In fact, it may not mean all that much.

Carolyn Johnson writes in the Boston Globe today that this may be all about the coming cell-phone wars, where Google doesn’t have anywhere near the head start that it does on the desktop. Even here, though, Google’s efforts to develop cell-phone software — the so-called Google phone, a.k.a. the “Android” — is the subject of much excitement. Everyone wants to know if Android-enabled phones will be cooler/ cheaper/ faster than the Apple iPhone. So even if Google’s cell-phone efforts are not that far along, they’re still considerably ahead of where Microsoft and Yahoo are.

I’m hard-pressed to say how this could affect the financially struggling news business except to note that this is all about online advertising. If competition between Google and Microsoft/Yahoo somehow helps the pie grow, then that can only be good. At the Online Journalism Review, Robert Niles is asking whether Microsoft should buy Yahoo. Only 19 people had responded by this morning, and they were evenly split.

Microsoft has not been an interesting company for many years. Its success is built almost entirely on two monopoly products, Windows and Office, which have their roots in the 1980s and which came to full fruition in the mid-’90s. The company has done a nice job in recent years with its Xbox video-game systems, but that’s essentially a side project. Contrast that with the iPod, which Apple used to rekindle interest in its Macintosh computers.

Yahoo? Enormous numbers of people go there, so I guess the company is doing something worth saving. But it’s fallen way, way behind Google in online advertising, and I don’t find what it offers to be particularly innovative or compelling. (I do like Flickr, the social network for photography that Yahoo bought a couple of years ago. But Flickr users are already protesting the Microsoft takeover, which could provide a shot in the arm to Picasa, Google’s own underdeveloped photo service.) I don’t use Yahoo Mail for anything more than diverting stuff I don’t want to a mailbox I never check. By contrast, I like Google’s Gmail so much that I now use it for everything. I also use Google Calendar, Google Documents, Blogger (of course), Google Earth and several other Google services. The company’s “cloud computing” concept is taking over my life.

As Robert Guth emphasizes (sub. req.) in the Wall Street Journal, Microsoft has not been Bill Gates’ company for some time. Steve Ballmer is firmly in charge, and that will become clearer later this year, when Gates retires. Ballmer is fiercely competitive, but if he shares Gates’ vision for how to shape technology markets, he’s never really demonstrated it. (Even Gates never had much vision regarding how good software should work, a shortcoming with which tens of millions of us must contend every day.)

Let’s not forget, too, that though Yahoo and Google have both been criticized for helping the Chinese government with its efforts to censor the Internet, Yahoo went quite a bit farther — actually providing information that helped the government arrest dissidents. Its fierce competitive culture aside, Microsoft has a reputation for being socially conscious. So maybe Microsoft will curb Yahoo’s excesses. But that has nothing to do with catching up to Google, either.

This John Markoff piece in the New York Times seems to get it directionally right. Google isn’t perfect by any means. Someday, someone will come along and knock it off its pedestal. But that challenge is not likely to come from two of yesterday’s giants. Microsoft still makes a ton of money, and will for years to come. That should keep Yahoo afloat.

Still, when Google one day feels the heat, in all likelihood it’s going to come from people who today are still in college or even high school. At the Guardian, Jack Schofield offers some sound advice to Microsoft, arguing that the deal might make sense if Ballmer and company transform Yahoo into their consumer division. His conclusion: “But is Microsoft ready to take that step? I think not.”

Photo (cc) by Erwin Boogert. Some rights reserved.

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  1. amusedbutinformedobserver

    “I don’t use Yahoo Mail for anything more than diverting stuff I don’t want to a mailbox I never check.”Doesn’t everyone?I keep forgetting the names I use for my yahoo junk mail boxes so I make up a new one every time i need to gain access to an on-line newspaper or something. I wonder how much of their total mail volume is people using it in just this fashionGmail is so far ahead. I use a mailbox just to receive, sort, and save mail from my three legitimate mail addresses (personal, business and commerce)

  2. Anonymous

    One thing you’re forgetting s the development tools that these three companies create. Google, Yahoo, and Microsoft all have competing libraries and standards that are still vying to be the dominant platform. (One from Yahoo, called Ext is what Adobe has settled on for its ColdFusuon product). Google is using OpenOffice in Googledocs, and Microsoft is is up to its traditional practice of “embrase and extinguish” of other standards.While these things do not contribute to revenue, are sometimes drains, and are often (as in the case of Ext) spun off nto their own non-profit organizations, these platforms, products, and protocols are the very foundation of Internet communication and interaction.Controlling the one that wins will virtually guarantee that the owner of it will be able to dictate how other companies’ products will be designed.Everything from IM, to word processing document specs, to web and phone services,to mapping (gps), to credit card processing … you name it.It goes far beyond the revenue generators. Think where we might be if Microsoft had developed the web and web browsing before Tim Berners-Lee and Marc Andreessen. I shudder.

  3. Ron Newman

    One service you overlooked is Yahoo Groups, which probably runs half of the mailing lists in the known world. (Internet old-timers will remember its two predecssors, eGroups and OneList.) Microsoft had better not mess with this service, which works quite well now.

  4. Curt Monash

    You’re way underestimating the actual and potential technology. gives lots of examples of what I mean.CAM

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