Tuesday, May 20, 2008

Details of Microsoft Offer to Yahoo - New York Times

Reading between the lines, I think it's possible that any price Google might pay for a similar deal with Yahoo just went up -- way up...  If the unofficial accounts quoted below are accurate, I also can't imagine why Yahoo would opt to disassemble itself.

Under its latest proposal to Yahoo, Microsoft would buy its search business and take a stake in the company, people briefed on the negotiations said Monday.

As part of a complicated deal, Yahoo would spin off its Asian assets, which include a stake in the Alibaba Group, a Chinese Internet company, these people added.

The proposal, which is subject to change, is an effort by Microsoft to scuttle a search-related advertising deal between Yahoo and Google, and could expand into a full-scale takeover.

I remember an exchange between Bill Gates and Jim Manzi, back in the early 1990s, when the PC software business was still relatively young, and the productivity application suite market was taking off (e.g., Microsoft Office versus Lotus SmartSuite). Bill Gates commented, when asked about a price war phase in the suite competition, "It's not a good idea to get into price competition with someone who has more money than you do." 

Very different market dynamics today, of course, but Yahoo is in the fray between the two players with the biggest bank accounts...

Details of Microsoft Offer to Yahoo - New York Times

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