I wrote this a couple of days ago, but didn't post it because I was intending to finish it out with tech news. My back log of articles and this post both grew too large for that though, so I apologize for the tardiness of this post. The other tech news will come tomorrow or Saturday and will be a huge post.
Not long after Bill Gates left Austin (in his private jet, I'm sure), a memo went out to Microsoft employees explaining how the takeover process would work and merging of cultures, almost implying that Yahoo had turned down the offer already. So as everyone hinted at and Steve Ballmer nearly cried out, Microsoft isn't going to rest until they own Yahoo. There's a lot to summarize about what has happened since the bid though, so let's start there.
There were a couple of knee-jerk reactions that Yahoo had. The first one is that they're worth more than $44.6 billion. Either they're bluffing or delusional, because some pundits believe that they're worth much less than that. At the time of the bid, they were worth less than $20 a share and only have come closer to Microsoft's $31 a share bid because of the bid. If Microsoft withdrew, I bet the stock would plummet. After all, Apple and Google's stocks have been dropping for a while now and they're much more stable companies. The other reaction is culture shock: the idea that Microsoft's "stodgy" environment would stifle innovation. Right, that's why Microsoft is the one whose stock hasn't been battered gradually over the past two years, because they don't take care of their employees. Having been to the Redmond campus, I can attest to it being pretty cool actually. I prefer Amazon, personally, and Google is obviously a lot more fun, but it's really not that bad considering how big and how old Microsoft is. I haven't been to Yahoo, but from how former employees have described their work life to me, it's really not quite that different. It may just be a little more risque and a little more open because it's a smaller company.
Yahoo has made no press release, as far as I can tell, saying that they formally decline the offer, but they keep saying that they don't want to do it, and so Microsoft has went ahead and explained that they're willing to send their own people to join the board of directors and establish an exchange offer, which basically implies cutting a deal directly with stockholders. This is what's commonly known as a hostile takeover. What's the problem with this? It's called "hostile" for a reason: it will hurt the morale of Yahoo's engineers and indicate that they care more about brand name, infrastructure, and customer base than talent. I heard Bill Gates say with my own ears that they are really interested in the engineers at Yahoo, but they would be willing to go forward with competing with Google on their own, if necessary. So basically, Microsoft is not so evil that they want to do this the hard way; they want to force Yahoo into submission. Maybe the proxy fight (i.e. forcing their own directors onto the board) will help them come to their senses, or maybe Microsoft will raise their bid (I think this is unlikely, but not impossible).
Microsoft has additionally sent out an e-mail to its employees explaining that they're going to work hard to merge the cultures of the two companies together (by the way, Yahoo will stay in California) after the deal is completed (a bit presumptuous, but it sends a clear message), but that employees should continue to compete with Yahoo until then. How has Yahoo reacted to this? In preparation for a hostile takeover, they have improved severance packages because it's definitely likely that people working in overlapping divisions will be laid off (though Microsoft isn't currently planning any) and they think it'll make executives more likely to consider the company's welfare rather than their own. This is a move that has upset shareholders. Some pension funds are suing Yahoo for not accepting Microsoft's higher bid last year while others are just impatient about Yahoo's holding off on this bid. In an act of strange defiance, they've purchased ad technology company Maven Networks, whose technology manages ads in videos, a quickly growing market. This just makes them all the juicier for Microsoft to swallow though, ultimately.
What's the bottom line of all this? The short and simple: Yahoo's Board is resisting Microsoft's offer despite the repeated requests from shareholders. Despite the fact that they haven't saved the company for the last 8 quarters, they don't want to cede to a giant and have turned to companies like Google and Time Warner for help, even. Microsoft believes that this would be an extremely strategic alliance and would create competition for Google, which we know is true because of how much Google is publicly flipping out over this acquisition. They'll stop at nothing for this to happen, in the ironic interest of increasing competition. Something I very much believe in and I would hope this deal will create. Are we feeding the Microsoft beast here? Maybe. If it doesn't happen though, we're guilty of feeding the Google beast though, and then we'll really see online innovation decline. I hope that Yahoo will just take the money and give up; it's not going to be that bad. I'm sure Bill Gates will even give Jeff Yang a lollipop.
Semi-unrelated to the takeover, I've been accidentally forgetting to talk about Yahoo Live, a service that launched a couple of weeks ago. I personally feel that it's an example of bad management at Yahoo and just proves the case for why Microsoft needs to step in. So what is this new service? Basically, Yahoo will host a live feed of your webcam, and then people can talk to you in a chatroom where you can also see a few of their live feeds in a tray at the bottom while chatting with them (well, anyone can who comes to your page). My initial reaction is that this is ridiculous: it's encouraging voyeurism, you get people saying "show us your boobs" in the female ones, and I don't get why people would want to be on camera like this. It does actually have it's uses: Diggnation loved the idea and wanted to use it for a town hall (they've probably already done this by now). It's perfect for that. I have a feeling that the initial drive were these online celebrities (I can't for the life in me remember their names) who had large cult followings of people who watched live feeds of them that were always on. So maybe Yahoo wants this to be the YouTube of that kind of stuff? I think that it's too much of a niche market and not mature enough for this. Do they really think that services like this will help save them?
CodeSOD: RAM On Through
15 hours ago