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May. 15, 2008 at 7:23am Eastern by Danny Sullivan
Icahn To Make Yahoo Move; Google Worries Yahoo Will Learn From Ad Deal
More rumors about yesterday's news that Carl Icahn may want to take control of Yahoo. He apparently plans to nominate 10 directors to replace Yahoo's board later today, reports the Wall Street Journal, using an unnamed source. But Microsoft might no longer be interested in Yahoo. Plus, that Google-Yahoo ad deal? Turns out Google might be nervous that Yahoo might learn too much from it and become a threat to Google.
Let's do Icahn first. From the WSJ article:
Mr. Icahn, who bought roughly 50 million Yahoo shares since Microsoft withdrew its offer, spent the past few days deliberating the proxy move before deciding Wednesday, one of the people familiar with the matter said. One reason for the deliberation is that Microsoft has suggested it has moved on and doesn't plan to consider any new proposal from Yahoo.
People close to the matter said Mr. Icahn failed to get a response from Microsoft about its interest in restarting acquisition talks. He elected to proceed because he views a deal with Microsoft as beneficial to both companies and one that executives would come to embrace. People close to the matter said Mr. Icahn has hired D.F. King, a proxy company, to work on a solicitation.
Reuters reports similar news from its own sources.
The report says that Google and Yahoo continue talking about an ad deal, and that this is likely to happen but not this week. I liked this part:
One of the people said some people at Google have concerns about advertising-related data Google might share with Yahoo under such an arrangement and Yahoo's ability to use that data to improve its own search advertising system to Google's competitive disadvantage over time.
Yep. My "I told you so" moment to those who thought the deal was all to Google's benefit. From my Leaving Las Yahoo: Microsoft's $5 Billion Mistake? article:
Ballmer's letter then attempts to knock down Yahoo's plans blow-by blow:
First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system.
Not necessarily. I was one who thought Yahoo would be shooting itself in the foot by dumping its own ad program. But if Yahoo's management wants to stay independent, sacrificing paid search is a way to do this. That's because it might be only a short-term sacrifice.
By accounts, Yahoo is not exclusively going to use Google's ads. It will continue to use its own system in addition to Google's. Taking on Google lets Yahoo buy some time to learn and improve its existing system and play catch-up to Google. (As a side note, it's just weird to see Yahoo talking about the "Panama" paid search system -- a code name for improvements to the Yahoo Search Marketing system that were rolled out over a year ago. Still using the code name just feels out-of-touch. But maybe Yahoo is continuing to use it as well....)
My read of this is Ballmer saying that Yahoo working with Google would mean it is not serious about the search ads side of the house. Perhaps that fear-mongering will work. But then again, working with Google provides an attractive challenge to Yahoo employees that they cannot get from Microsoft. They can work with a search volume well above that of Microsoft's, plus actively see how what they are doing compares to Google monetization.
For more, see our past coverage of the Microhoo saga here, including these recent stories:
- Can Icahn Or Microsoft Stop Google's "Natural Monopoly"
- Google Executives Defend Potential Yahoo Search Deal, Microsoft Releases "Proxy Directors" And Looks Beyond Search And "The Last Click"
- Microsoft & Facebook Do Mating Dance As Microsoft Seeks Alternatives To Yahoo; Google Now Uncertain On Yahoo?
- Aftermath: Yahoo Still Open To Deals; Stock Largely Survives
- Yahoo Next Steps: Google Deal, AOL Purchase, & Pleasing Investors
- Leaving Las Yahoo: Microsoft's $5 Billion Mistake?
And see related coverage via Techmeme.
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By Danny Sullivan
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