Months after Microsoft’s $44.6bn offer for Yahoo, things have taken a decidedly different turn from my initial hypothesis – i.e., that the offer was too good to refuse. On the contrary, the Yahoo board ran away from it as if it were a horse head in their bed. Yesterday, after confirming that it no longer was in a discussion with Microsoft of any sort, Yahoo announced the partnership with Google that they had been testing over the last couple of months.
Why did the deal with Microsoft lose its air of inevitability as fast as Hillary Clinton’s nomination? One reason has to do with facts; the other, perhaps, with corporate hubris. The factual reason is that putting together two weak search and advertising engines would not have produced a strong one. The other, that Yahoo’s pride as an Internet pioneer and innovator prevented the company from contemplating life as a non-independent entity.
Time will tell if the Google partnership is a better way. Hooked on life support to Google’s more powerful algorithms, Yahoo is going to be drained of its own lifeblood and survive as a husk of its former self. Also, notice that the deal only applies to the U.S. and Canada; Yahoo’s European market share is being left out to slide into irrelevance.
Industry observers debate whether Google’s dominance matters to the point that it has gelled the entire Internet into a shape that will be hard to change, or whether people should quit worrying about search and just think about the next big disruptive thing. Your ideas?