Yahoo’s Google & Microsoft Deals, Side-By-Side

I was off most of Friday when the Google-Yahoo deal was announced — and then details of Microsoft’s last proposal to Yahoo also came out. Today was catch-up, and I wanted to put the deals next to each other in chart form. Google-Yahoo doesn’t seem as bad as some are making out. I may do a longer post on all this later in the week. No doubt, Google got a sweet deal here. But I wouldn’t say Yahoo’s a chump at all. The chart:

Feature	Google	Microsoft
Stock Purchase	Google might have shown Yahoo investors love by a purchase, but that might also have triggered more anti-trust issues	Would have purchased $8 billion worth at $35 per share, probably producing a short-term spike in value
Search Assets	Yahoo maintains own paid & organic search services	$1 billion to acquire paid and organic search. Yahoo would have been out as a search player. Right now, it’s second place with Microsoft third and yet to gain on Yahoo
Paid Search	Google powers some; Yahoo maintains its own service and can partner with others. Smart move if Yahoo believes it really does have long-term future in search	Microsoft powers all, presumably from blending Yahoo & Microsoft systems
Organic Search	Yahoo powers all	Microsoft powers all, presumably from blending Yahoo & Microsoft technology
Contextual Ads	Google powers some	Appears Yahoo would have continued keeping this; Microsoft itself doesn’t have a substantial program
Domain / Direct Navigation Ads	Yahoo appears to continue selling its own ads in this very lucrative space	Uncertain if Microsoft would have taken this over
Market	US & Canada & non-exclusive. This is important — Yahoo could still partner with Microsoft elsewhere. Moreover, those valuing a Yahoo-Microsoft deal to Yahoo-Google should remember that Yahoo effectively has "more to sell"	Worldwide
Term	4 years initially; 3 year renewals optionally for total of 10 years	At least 3 years
Guarantees	Yahoo guarantees Google can serve $83 million in ads each quarter on Yahoo or can walk out in first 10 months — call it about $100 million overall; Yahoo doesn’t have to send any set number of queries to Google; Yahoo amazingly has no public revenue guarantees from Google	In company memo, Microsoft said it would have guaranteed Yahoo would earn more than it currently makes, for 3 years.
Poison Pill	Yahoo has to pay $250 million if there’s a "change of control" that terminates the agreement in first two years; more restricted terms applied to what "control" means if Microsoft gains Yahoo shares	If Microsoft did take over Yahoo, after 10 months, it could continue the agreement with no guarantees to Google and still avoid poison pill payment
Financial Upside	According to Google & Yahoo, $250-$450 million per year in extra income — up to $800 million annually; Microsoft & Yahoo could still partner outside US	According to Microsoft, $1 billion per year in income above current levels
Other Upside	Yahoo maintains control of a powerful search brand, can partner outside US; Yahoo & Google IM services to talk to each other	Yahoo would have no need to maintain engineering staff, infrastructure and protect against brain drain
Downside	Anti-trust issues might not allow (but Microsoft-Yahoo had issues, too)	Microsoft would compete with Yahoo in display area, yet Microsoft has strongly suggested search+display is a winning combination - so Yahoo would lose a key component other than "data" that would be given to them; search was main value (to me) of earlier deal at $40 billion, now only worth $9 billion?
Anti-Trust	Yahoo & Google think it’s not an issue; already had earlier test cleared; will wait 3 1/2 months for US Justice Department review	Yahoo & Microsoft might have had issues in email & other portal services; Microsoft expected to fight Yahoo-Google
Challenges	Yahoo brain drain; who’s still running stuff?	Microsoft stays stalled in search; brains from Yahoo feel like they’re still going to Google