Archive notice: This article was originally published on July 2, 2008. Links and embedded videos are preserved as part of the historical record.
US software group Microsoft apparently has not yet abandoned its effort to gain a foothold in Yahoo. According to a Wall Street Journal report today, Wednesday, citing people familiar with the matter, another attempt to acquire Yahoo’s search-engine business is already being planned. Microsoft is apparently relying on allies to achieve this. Insiders say the company has invited several other media groups to discuss forming an alliance in recent days. Microsoft is said to have spoken with Time Warner and Rupert Murdoch’s News Corporation, among others. The apparent aim is to break up Yahoo: the Redmond company would acquire its search-engine business, while the chosen partner could claim the rest of the group, the report says.
“The importance of Microsoft gaining entry into Yahoo is obvious. The software company is trying to establish itself in the lucrative search-engine business,” RZB analyst Leopold Salcher told pressetext.de. Bill Gates has since acknowledged that the Redmond company itself failed to become involved in this field early enough. “Microsoft’s persistence regarding the Yahoo acquisition is a clear sign of its enormous importance,” Salcher added. The central underlying objective is evidently to strengthen Microsoft’s market position against dominant search provider Google. “Even if Microsoft succeeds in entering Yahoo, competing with Google will be difficult. The search provider clearly dominates the market and gained even more market share last month,” Salcher said.
The takeover battle for Yahoo has occupied the international financial community for almost six months. It began with an offer from Microsoft to acquire Yahoo in its entirety for around $45 billion. When Yahoo rejected the proposal, Microsoft changed course and offered instead to acquire a 16-percent stake together with Yahoo’s search-engine business. Yahoo’s management, led by CEO Jerry Yang, continued to oppose a takeover, arguing that its advertising partnership with Google was far better.
Recently, however, Yahoo’s leadership has faced increasing criticism from its own shareholders and board members. Even rejecting the full takeover offer was described as a “momentous mistake.” “Microsoft is playing for time and waiting for pressure on Yang to increase further. As a result, the likelihood of Microsoft successfully gaining entry into Yahoo has risen somewhat again recently,” Salcher concluded.
