Finding meaning in Microsoft and Yahoo

While the rest of us are worrying about whether we should be worrying about the credit crunch, Microsoft slaps down a cool $44 billion in its bid to buy rival Yahoo writes Peter Williams.

Timing is all in business (as in much else in life). Of course, part of the reason for the bid now was that stock market nerves on the likelihood of a US (if not world) recession had made Yahoo look, well if not cheap, then certainly better value.

The idea of a Microsoft and Yahoo forming some sort of alliance is not new; it was being discussed around Wall Street back in May 2006. The theory back then was that Microsoft was behind with its core search technology and Yahoo was struggling with its paid search service. That may have been the thinking then but it only works if you are convinced that there is some mutual benefit in coming together. The danger (the point is general not particular) is the chances are that you just compound the problems not solve them. Research from accountancy firms suggests that a majority of mergers destroy shareholder value rather than add to it. And the number one difficulty in getting it right is integrating the cultures of the acquired and acquiree. Cultural similarities between Yahoo and Microsoft? To be discussed.

In yesterday’s (6 Feb 2008) email to Yahoo staff (sent on for regulatory reasons to the US takeover regulator, the Securities and Exchange Commission (SEC)), “jerry” (that’s Chief Executive Officer and Chief Yahoo Jerry Yang to you and me) said the bid wouldn’t distract from the task of “pursuing our transformation strategy.”

Well maybe. But while the poor investment banker community are relieved that an M&A deal of substance (i.e one which will take some time and lots of fees to sort) has come onto the table, the question for information professionals is what does this mean (if anything)? At this stage it is not an easy question. Perhaps the best answer can be found in the Google generation report which my colleague Dan Griffin has talked about. The research tried to separate myth from reality for the Google generation. One idea posited by the research is that the Google generation thinks everything is on the web and it’s all free. Anecdotally, says the research, this appears to be true and certainly there is much evidence that young people are unaware of library-sponsored content or are at least reluctant to use it.

One consequence of the battle between the search giants is that in time we may all end up paying more (in one way or another, such as exposure to advertising) to take full advantage of the digital age. While being aware of access issues, if paying can mean an increase in the quality of content and search, then maybe information professionals would be among those who would see that as a good move.