Microsoft Walks Away From Yahoo

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Its the anti-climax but this is how it appears it is best for all. Microsoft’s CEO Steve Ballmer in a letter to Yahoo CEO Jerry Yang mentioned five reasons for deciding to walk away from the Internet Major, chief among them being that it was not ready to raise its bid to the $35-$37 per share that Yahoo’s board demanded and also that the partnership with Google in ads was simply not acceptable.

An excerpt from CNN:

In a letter to Yang, Ballmer gave five reasons why he decided to quit pursuing a bid. First, a Google-Yahoo tieup would encourage advertisers to use Google as opposed to Panama, Yahoo’s own search system. Not only would that fragment Yahoo’s search advertising strategies, it would also “undermine the reliance on your display advertising business to fuel future growth,” Ballmer wrote.

Larry Dignan from ZDNet has very astutely presented several points as the why the walking away would do well for Microsoft and Yahoo. There are too many issues around regulatory approval and integration both on the culture and the technical side that would have taken time and time is what Microsoft does not want to concede to Google.

What is expected next is that Microsoft will seek to use its cash stock for other nimble acquisition to bolster its position in the online advertising space. But also expect the company to use all its might to get the Google-Yahoo deal scrutinized.

For now, this is an anti-climax that few expected with all the aggression from Redmond. Jerry Yang has a lot on his shoulders now since he has to deliver on the results that he promised Yahoo was capable of. Perhaps the biggest issue that caused the merger to not go through was the perception of what it would do to the engineering talent on both the sides. As of now, this seems to be the best thing to happen for people working on the online products at MS and Yahoo. Do you agree?


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