Microsoft deal makes a Google rival

Doug Krizner Feb 1, 2008


Doug Krizner: Holy web browser! Microsoft has made a bid to buy Yahoo. The offer is $44.6 billion in cash and stock.

Here’s Microsoft CEO Steve Balmer:

Steve Balmer: We also see this announcement as the next major milestone in Microsoft’s company-wide transformation to embrace online services overall and to invest very successfully in search and advertising.

Microsoft is offering $31 a share. That is 62 percent above where Yahoo closed yesterday.

Marketplace’s Lisa Napoli keeps a close eye on all things Internet. She’s joins us now. Lisa, we know these two were in friendly merger talks a year ago. So this morning, Microsoft makes a hostile offer. What’s your reaction?

Lisa Napoli: Well, there have been, for years now, three dominant players in the search wars. Of course, there’s Google, which has strayed above everybody else. Then there’s been Yahoo and Microsoft. And if you consolidate the power of Yahoo and Microsoft, you have a real rival against Google, whereas up until now, you haven’t really.

Krizner: So Google reported some disappointing earnings last night. It seems like fewer people are searching or clicking on Google ads when they do their searches. Do you have any sense of what this may mean for Google in the bigger picture?

Napoli: Well, it means that Google has a more formidable rival. Microsoft is a rival to anybody in the tech space in any area that it touches, because it’s Microsoft — it owns the desktop. So if Microsoft has something as powerful as Yahoo — which, by the way, you may remember was the Google of its day, before there was Google — then together, it makes for a bigger, better rival.

Krizner: Now, Google already has a small stake in AOL, and I was hearing some speculation this morning that the Microsoft-Yahoo deal may cause Google to take over all of AOL. Do you think that’s a possibility?

Napoli: Well, anything’s always a possibility, and especially in the tech world. And it wouldn’t surprise me — it would make a lot of sense.

Krizner: Marketplace’s Lisa Napoli. Thanks so much.

Napoli: Thank you.

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