Microsoft/Yahoo merger pros and cons
Reports indicate that Microsoft and Yahoo have renewed discussions on the subject of a possible merger, acquisition, or partnership which would strengthen both their market positions. Ri Pierce-Grove, analyst with independent market analyst Datamonitor, believes that while acquiring Yahoo would significantly boost Microsoft’s capabilities, integration of operations could potentially present thorny cultural and technological challenges.
Search-driven advertising is consuming an increasing share of ad budgets worldwide, as companies look for new ways to connect with a splintered mass audience. Both Microsoft and Yahoo are strongly motivated to find ways to dethrone Google, the current market leader, and the combined mass of the two companies’ client and consumer bases could generate a viable competitor to Google on both the desktop and the mobile device.
Microsoft, which has not historically emphasised acquisition as a growth strategy, made headlines with a recent acquisition of TellMe, making the company’s intentions clear with regard to mobile search. In this context, says Pierce-Grove, acquiring Yahoo would significantly build out Microsoft’s capacities, and allow it to move more aggressively into an expanding new market.
However, integrating operations for these two firms would potentially present thorny cultural and technological challenges, which will bear close watching in the event that this engagement moves past the discussion table.
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