I am sure you all have heard of this new development that is Microsoft trying to buy Yahoo! in order to effectively challenge the big dog Google in the search and online advertising market. Many industry experts have come out to explain why they believe Yahoo! + Microsoft will be challenging Google in the upcoming years. I completely disagree with this. I actually believe this is not such a good move at all. Not for Yahoo! anyway:

• Yahoo! and Microsoft have relatively different corporate cultures. It would be especially hard for Microsoft to dictate its culture over Yahoo! employees without turning a few off them off. I would expect a fairly high turn over ratio once Microsoft acquires Yahoo! This is all better news for Google. Google doesn’t need to acquire Yahoo! really. They are better off acquiring the brains that made Yahoo! successful, and you can bet that they will try to woo the Yahoo! crowd from Microsoft.
• One would wonder what synergies Microsoft is after by combining these two giant entities. Is Yahoo + Microsoft really less than [YahooMicrosoft]? We shall see, but unless we are talking about scale, I can’t see any other reason why Microsoft would go after Yahoo! I know, Microsoft will become the clear No. 2 guy in the search market, but I guess one should wonder what Yahoo! has to offer to make Microsoft a legit contender for that No. 1 spot.
• Microsoft will probably kill Yahoo! by acquiring the company as the two have somewhat incompatible culture and business philosophies. At the same time, we will be left with an industry that is basically a duopoly now, and we can expect less competition in this industry which will be bad for the users. Let’s hope someone else rises up to challenge Microsoft or Google.

Whatever happens, Google will still protect its lead in the online advertising and search market. I do expect Microsoft to push Google hard, but it is interesting to see how Microsoft approaches their new role as underdogs in this market. Google is the clear front-runner, and Microsoft has shown in the past that it is clearly not a good front-runner, so maybe Microsoft is better off being No. 2. In the meantime, I believe Yahoo! should really accept this generous offer by Microsoft. Yahoo! has been a great company, and it’s one of those brands that we will remember for a long time to come. At the same time, Yahoo! management has shown that it has run out of ideas on how to effectively challenge Google, and maybe it is time to move on. Whatever happens, the second half of 2008 just got more exciting!