Microsoft Yahoo: Not Interested Becomes Interested

December 6, 2008

After a fun-filled 10 hour flight from England to cold Kentucky, I chuckled at “Ballmer Says Yahoo Search Deal Better Sooner than Later” by Dawn Kawamoto here. The London Times got a piece of the story but Microsoft and others disavowed any interest in Yahoo. After hiring Yahoo search expert Qi Lu, Ms. Kawamoto snagged this comment from Mr. Ballmer:

I think a search deal makes great sense for Microsoft, and Yahoo, and I think I’ve been very open about that…Our focus on portal and search is super-strong, and even if we never do a Yahoo deal or anything else, I wanted to have Qi come on board. It is kind of a bonus that if something happened with Yahoo I’m sure it’s somewhat simpler.

The renewed interest is fascinating to me. Microsoft will face some challenges because it will have search, Fast Search & Transfer, its own SharePoint search, and Powerset. I don’t think search is what Microsoft needs. My hunch is that Yahoo search is seen as an eyeball deal. In my opinion, it will be interesting to see if the deal goes through. Then will a tie up with Yahoo deliver more eyeballs or will those eyeballs deduplicate themselves. What happens if the combined Web site search traffic flat lines or declines relative to Google. Microsoft is buying clicks with its cash back program. I think there are some assumptions about traffic that will become clearer if the deal goes through.

Stephen Arnold, December 6, 2008


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