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Can Google Save Yahoo By Taking Over Search?
Does Yahoo have any choice but to get purchased by Microsoft? Over the weekend,
there’s been much analysis and discussion of other suitors. While Google isn’t
seen as an outright buyer, there’s more talk that it could help Yahoo by taking
over search ads in various counties, with reports on this out from the Wall
Street Journal and Reuters.
It has seemed unlikely to many that Google could buy Yahoo, since it had
trouble enough getting regulatory approval (from the US so far) to buy
DoubleClick, which barely competes with Google. Yahoo is a direct competitor in
search and ads, and a purchase by Google would only strengthen that company’s
The Wall Street Journal
today that Google CEO Eric Schmidt called Yahoo CEO Jerry Yang to offer Yahoo
help, though what that was isn’t said. Speculation is that Google might offer
money or revenue guarantees for an ad pact with Yahoo.
commented before (most recently
in Ad Age) that I think
it would be silly for Yahoo to get out of serving ads on its own. But if Yahoo’s
looking at a choice of being absorbed by Microsoft, it’s effectively getting out
of the game anyway. If it wants to stay independent, an ad pact might make
sense. That’s even more so if it gives Yahoo guaranteed revenues and can play
out in countries where Yahoo isn’t strong. From the Journal:
Yahoo already had been in negotiations in recent weeks to outsource its
Web-search advertising in Europe to Google, say people familiar with the
matter. Since last year, investors have called for Yahoo to abandon its own
search advertising system, which generates significantly less ad revenue for
each consumer search, and use ads from Google in return for a majority share
of the revenue.
I still think it would be a bad long-term move to make, for Yahoo to dump its
own ad and search technologies. But getting out of ads in Europe makes more sense because Yahoo has been weaker
there, plus it has a terrible system that requires advertisers who wish to
target a particular country to open different accounts.
Jumping away from
European countries where it is
a shutdown of staff could indeed be a good move. That shutdown means Yahoo portals
would eventually disappear in terms of traffic, similar to how Excite has
suffered over the years. But a Google pact could bring Yahoo plenty of
short-term money and allow it to stay focused on regions where it
reports similar news about a Google-Yahoo ad pact in general:
Yahoo Inc would consider a business alliance with Google Inc as one way to
rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with
Yahoo’s strategy said on Sunday.
Yahoo management is considering revisiting talks it held with Google
several months ago on an alliance as an alternative to Microsoft’s bid, which,
at $31 a share, Yahoo management believes undervalues the company, the source
How about other companies? Don’t look at News Corp or other players like AOL,
the New York Times:
In addition, several Google executives made “back-channel” calls over the
weekend to allies at companies like Time Warner, which owns AOL, to inquire
whether they planned to pursue a rival offer and how they could assist, these
people said. Google owns 5 percent of AOL.
Despite Google’s efforts and the work of Yahoo’s own bankers over the
weekend to garner interest in a bid to rival Microsoft’s, one did not seem
likely, at least at this early stage.
For example, a spokesman for the News Corporation said Sunday night that it
was not preparing a bid, and other frequently named prospective suitors like
Time Warner, AT&T and Comcast have not begun work on offers, people close to
them said. They suggested that they did not want to enter a bidding war with
Microsoft, which could easily top their offers.
TechCrunch has a rundown on players that might help Yahoo as well, with the
most interesting but perhaps unlikely being a rumored plan by Yahoo’s former COO
Dan Rosensweig to sell off most of Yahoo and give Facebook its search and ad
Now that would be interesting. Facebook continues to be a company with lots
of potential but no real core search capability, plus its current ads system is
so basic to be laughable when compared to the mature ad systems at Google and
Yahoo (see My Love/Hate
Relationship With Facebook Ads: 10 Ways They Could Improve).
For past coverage on the Microsoft proposal from Search Engine Land, see our
Yahoo Merger category. For discussion across the web on the Google move, see
here on Blogrunner and see
here on Techmeme.