Techmeme is exploding once again with rumors that Microsoft is considering an acquisiting of Yahoo in order to compete better against Google. Should Microsoft buy Yahoo? Well, it is one company that Google is unlikely to be able to outbid Microsoft on, considering the anti-trust implications. 🙂 It also might give Microsoft’s MSN division a much needed boost and both companies an opportunity to trim duplicate costs.
The huge downside here is the expense. We’re talking real money here, if the speculation is correct that it’s in the $50 billion range. Sure pales in comparison the many acquisition prices in the past that people considered too big. Think of how many TechMeme/Twitter/Federated Media-like companies that money could buy. “Small is good,” I’d keep repeating.
In fact, Microsoft has done reasonably well in the past with small deals–at least that’s the way I think of the company. It’s just that it’s been sitting on the sidelines waiting too long to decide and has lost out on several opportunities. Is the solution to buy big? I’m not so convinced, but I’m sure there are some creative Google-AOL like possibilities.
However in terms of advertising, I’ve said it before, I’ll say it again: Microsoft has a huge opportunity to improve online advertising–particularly for many of its most vocal “partners”–the many bloggers, community run sites, and news sites that cover Microsoft-related technologies. Google ads are too broad, have too much off-topic, spam-like content for these sites. Not only does this reduce ad revenue for everyone, off-topic ads degrade the quality of the publication. In many respects, an ad system similar to those available pre-Google AdWords/AdSense is needed. Badly. It’s been unfortunate that up to this point Microsoft’s adCenter has created an ad system that carries over these same weaknesses. Maybe it was needed as a foundation. Could be. But I think a much better approach would have been to set off on a slightly different course at the core. There’s still a huge opportunity here for Microsoft, though.
At the same time, I agree with Don Dodge that another great advertising platform that needs attention is with respect to mobile devices. The up side here is that mobile searching is still early. Come to think of it, that may be the drawback too for such a large company as Microsoft. Nonetheless, I see and read that Microsoft is making progess in this area. Microsoft would need to work with its hardware partners even more to pull this off even better than Google. Might WinHec give a hint as to whether Microsoft is going this direction? To me, MEDC didn’t and Mix07 was ambiguous.