News

Microsoft Wants Yahoo's Search Biz, Reports Say

Microsoft now wants to buy just a part of Yahoo, according to the latest rumors hitting the dailies.

• By Kurt Mackie
• May 20, 2008

The alleged deal would involve Yahoo selling off its holdings in Yahoo Japan and the Alibaba Group, a Chinese Internet company, and then Microsoft would buy Yahoo company shares, according to the Reuters and WSJ accounts. Microsoft would end up holding a "minority stake" in Yahoo.

Ostensibly, Microsoft's aim in buying Yahoo's search business would be to thwart Google's huge market lead in Web search advertising. However, even if Microsoft were to wholly acquire Yahoo, which the company has not ruled out, Google's would still hold its first-place position in online search. In the U.S. market alone, Google's search engine is used about twice as much as Yahoo's and Microsoft's combined, according to a comScore ranking.

Yahoo is currently talking with Google about a deal to return that company's ads with Yahoo searches. However, the prospect of Google and Yahoo collaborating on search advertising has alarmed Microsoft. In April, Brad Smith, Microsoft's general counsel, warned that "any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google's hands."

Meanwhile, Google sees trouble for itself in the renewed Yahoo-Microsoft talks. Google executives held an "emergency meeting" yesterday to discuss the implications of a Microsoft-Yahoo deal, according to a U.K. Times Online story.

Google's Cofounder, Sergey Brin, even offered to bring in Yahoo's CEO Jerry Yang if the Yahoo board were to oust him, the Times' story said. Yahoo investor and corporate raider Carl Icahn is currently threatening to replace Yahoo's board with his own slate of board candidates in an attempt to force a sale of Yahoo to Microsoft.

Google has expressed concerns about Microsoft's acquisition plans before. Late last month, Google's CEO Eric Schmidt told CNBC that "We've primarily been concerned about the possibility of a Microsoft acquisition of Yahoo because of Microsoft's history and because the assets that Yahoo has are quite valuable."