Microsoft-Yahoo Deals 2008 & 2009, Side-By-Side
Danny Sullivan on July 29, 2009 at 1:08 pm
We’re about to do a call with Microsoft and Yahoo for more details about their proposed search deal. As part of that, I wanted to outline what we know so far and how that compares to the deal Microsoft made last year. At first glance, Microsoft is getting a huge bargain courtesy of the US Department Of Justice. Without Google being able to compete for Yahoo’s business, the billions that were floating around in 2008 become millions in 2009.
Note that we’ll be updating this chart throughout the day. For more background on the deal, also see our other articles today:
- It’s Finally Official, Microsoft & Yahoo Make A Deal, Yahoo Gives Up On Search
- Live Blogging The MSFT – YHOO Search Press Conference
- Micro-Hoo Details: Q&A With Mehdi & Schneider
- A Search Eulogy For Yahoo
- The Microsoft-Yahoo Search Deal, In Simple Terms
| Feature | 2008 | 2009 |
| Stock Purchase | Would have purchased $8 billion worth at $35 per share, probably producing a short-term spike in value | Microsoft’s buying no stock |
| Search Assets |
$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 | Microsoft’s paying nothing for the assets |
| Paid Search | Microsoft powers all, presumably from blending Yahoo & Microsoft systems | Microsoft is handling all self-serve sales; Yahoo sells to undefined “premium” advertisers for undefined period of time. Appears that advertisers of both types may have to buy ads at both Yahoo and Microsoft. Boosts Microsoft share if so. Microsoft hindered with direct relationship with key clients |
| Organic Search | Microsoft powers all, presumably from blending Yahoo & Microsoft technology | Microsoft powers all web search; uncertain what happens with things like news search, maps, Delicious, Yahoo Directory. Uncertain what happens to Yahoo BOSS (probably goes away) |
| Contextual Ads | Appears Yahoo would have continued keeping this; Microsoft itself doesn’t have a substantial program | Appears Yahoo may keep this |
| Domain / Direct Navigation Ads | Uncertain if Microsoft would have taken this over | Appears Yahoo may keep this |
| Market | Worldwide | Worldwide (though uncertain about joint venture in Japan) |
| Term | At least 3 years | Yahoo gives up its search technology for 10 years; uncertain if it can use it again after that [and wouldn’t be that useful anyway]Microsoft pays Yahoo 88% of sales of search ads on Yahoo’s own sites [if I understand right] for 5 years
Microsoft guarantees revenue per search in each country for 1 1/2 years — what that revenue is hasn’t been clearly outlined. |
| Guarantees | In company memo, Microsoft said it would have guaranteed Yahoo would earn more than it currently makes, for 3 years. | Seems that Microsoft will now guarantee revenues for 1 1/2 years. |
| Poison Pill | 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 | Nothing specific outlined |
| Financial Upside | According to Microsoft, $1 billion per year in income above current levels | Yahoo says it will boost income by $500 million [per year, one time? not said] and save $200 million in capital expenditures [one time expense?] and boost cash flow annually by $275 |
| Other Upside |
Yahoo would have no need to maintain engineering staff, infrastructure and protect against brain drain | Yahoo maintains control of a powerful search brand |
| Downside | 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? | Yahoo thought it has to own search tech back in 2004 to be successful as a search engine and a portal. So did Microsoft. Now Yahoo betting it won’t become like AOL |
| Anti-Trust | Yahoo & Microsoft might have had issues in email & other portal services; Microsoft expected to fight Yahoo-Google | Probably not an issue but expect Google to lob challenges |
| Challenges | Microsoft stays stalled in search; brains from Yahoo feel like they’re still going to Google | Up to 24 months leaves Yahoo’s future further in doubt while Microsoft continues pushing Bing |
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