Microsoft: We Don’t Need Yahoo (Now), aQuantive Deal ‘More Of A Merger’

The Wall Street Journal (subscription required) ran an article quoting Microsoft’s Yusuf Mehdi, who made the following statements at a Goldman Sachs Internet conference:

“Yahoo has a great business. Kudos to them, but we’re bigger globally. We have half a billion people . . . I still don’t think it’s the end of inning one. Google is a good product and a good brand, and you can’t just match that. You have to do something big and bold and different. Nobody’s really done that yet.”

The article goes on:

As for advertisers, the aQuantive deal will help Microsoft get to hundreds of thousands of advertisers — like Google — from its current level of about 50,000, he said. Targeted advertising in display is the exploding market, compared with search-based advertising, he said, and aQuantive has the technology to be a major player in the targeted display placement market.

Mehdi said that the company’s assets and those from aQuantive would permit Microsoft, among other things, to begin to offer “integrated” display and search campaigns.

Regarding the aQuantive acquisition and the staggering purchase price SEW’s Kevin Newcomb points to a Seattle PI post that documents an exchange between Steve Berkowitz, senior vice president of Microsoft’s Online Services Group, and the audience at a JP Morgan technology conference. In that speech, Berkowitz describes the aQuantive buy as “more of a merger”:

“I look at it more as a merger. … There are certain acquisitions you acquire to look at and say, ‘OK great, there’s lots of cost synergies, and how are you going to do that.’ We look at the aQuantive acquisition as one of revenue opportunity and relationship opportunity. … We didn’t have a strong publisher-facing relationship. … We have a very strong advertiser connection but we didn’t have the tools for the advertisers. So we look aQuantive as an additive, or more of a merger of businesses, and that for us is really exciting, because it’s getting us into places we weren’t in before.”

It very much remains to be seen whether aQuantive fills in all the blanks for Microsoft and justifies some of Mehdi’s assessments. While it definitely enhances the company’s advertising and client servicing capabilities; it clearly doesn’t help the company in terms of search market share or brand.

Related Topics: Channel: Industry | Microsoft: Business Issues | Microsoft: General

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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