WSJ says Microsoft might be serious about this Yahoo thing

The Wall Street Journal is reporting that Microsoft is deep in negotiations to purchase a stake in the former search engine giant Yahoo. The curious part of this story is the fact that Microsoft seem to be (understandably) trying to be as careful as possible with the approach to this deal. According to the WSJ:

The structure being discussed is unusual, in that Microsoft is not seeking full ownership of Yahoo, but rather acting in effect as a financier partly in exchange for being able to retain some influence over Yahoo’s future, the people said. The two companies struck up an Internet search partnership in 2008, after a failed bid by Microsoft to buy Yahoo. Under the joint bid currently being discussed, Microsoft would not own common shares, they said. Microsoft’s contribution would likely be several billion dollars, although the exact amount hasn’t been decided and would depend in part on the total price the buyout group is prepared to offer for the Internet company, the people said. The largest chunk of the all-cash offer under discussion would come from bank financing, they added.

I love that phrase “being able to retain some influence over Yahoo’s future” This actually makes sense strategically I guess. Microsoft alone is so far behind Google that they need to keep an eye on Yahoo forever to make sure that no other third party takes over that company and puts Microsoft alliances in jeopardy. I believe that Yahoo and Microsoft together have about 29 to 30% of the webs search traffic and Google has about 65%. If Yahoo decided to go in a separate direction and their search alliance was derailed at some point, Bing would go back to having a 15% share of a large market and in light of the strategic direction that Microsoft has set, this would be a catastrophe. Microsoft have to remain competitive in the search space or it will be an Achilles heel for the company going forward. This promises to be a very interesting deal to watch. Stay tuned to the site for more Windows 8 news.  ]]>