Pender's Blog

Blog archive

Why Is Yahoo Suddenly Some Sort of Prize?

Not since Brett Favre unretired for the second time has there been so much attention paid to a broken-down old war horse that should have already been put out to pasture. But here we are with Microsoft and Google batting for Yahoo, the Willie Mays with the Mets of the Internet industry.

As the old folks have been known to say, c'est la vie -- it goes to show you never can tell. Seriously, though, how did we get here? How is Yahoo even still alive, much less possibly sought after now by both Microsoft, which was laughing not long ago about not having bought the struggling online pioneer, and Google, which seems to hardly need Yahoo's services?

And then there's the Chinese company, Alibaba, with a moniker that makes it sound like a wrestler from the old Dallas Sportatorium or a racially insensitive cartoon character from the '30s. (Although Ali Baba is, in fact, a character from Arabic literature, if you believe Wikipedia, as we all should all the time.) Even Alibaba is on the chase for Yahoo, making the whole thing even more perplexing.

The simple explanation for all this seems to be that Yahoo is probably going to go pretty cheaply when it does go. But what would a buyer get out of it? Well, we suppose Alibaba (a friend of the Iron Shiek, perhaps?) would get some sort of entry into the U.S. search game, although China doesn't exactly seem like a shrinking market. And the U.S. isn't exactly wide-open in terms of consumer search.

Microsoft pretty much already pulls Yahoo's strings, so a buy here might make the most sense -- or the least. Microsoft made noise about buying Yahoo a few years back then whiffed on the deal, and then it pretty much co-opted Yahoo's technology to run Bing. Something about a cow and getting the milk for free comes to mind here. Why would Microsoft spend the money to buy Yahoo all the way out? Desperation to catch the market leader? Has that worked for Microsoft yet?

That brings us, of course, to Google, which almost certainly doesn't want to actually buy Yahoo but is probably just in the mix, admirably somehow, to screw it up for everybody else. The regulatory tangle of a Google-Yahoo buy would be almost incomprehensible, and what does Yahoo have that Google actually needs? The attention of Microsoft -- that's what. Google just wants to drive up the price somebody else (we're honestly guessing Microsoft, or some Microsoft-backed consortium) will have to pay.

The net result of all of this is...well, nothing, really, for most of us. (We all use Google, anyway, right? Or we just do stuff with apps on our phones and tablets now.) It's just a funny tale of how a little attention from a couple of rivals can turn a junkyard clunker into a would-be sports car in no time at all.

So, who will win the race for Yahoo? Google will, of course, by not buying Yahoo but still managing to goad some rival into overpaying for it. That's how it goes in today's industry: Everybody tries very hard, and in the end Google and Apple win.


Posted by Lee Pender on October 26, 2011