The right deal for Yahoo

We're going to claim ownership of this idea: that the right partner for Yahoo isn't Microsoft, but Google. A JP Morgan analyst, cited in Barron's, estimates that Google's more liquid exchange for text ads, if brought to bear on Yahoo's search results, could add more than $1bn to the Sunnyvale internet company's 2008 earnings. That would create more value than any other possible deal for Terry Semel's lumbering internet portal.

Barron's Eric Savitz thinks the deal could get past the anti-trust authorities, because a combination of the two biggest internet media companies would still have only 4% of the US advertising market, if one includes both online and traditional media.

Valleywag's idea, first floated in January: just do a long-term deal to bring in Yahoo's search engine as an affiliate of Google's Adwords search marketing business, which would be less obviously monopolistic, as well as less convoluted; and do a deal soon, before the government wakes up to the fact that Google will soon be way more powerful than Microsoft.

5:09 PM on Mon May 7 2007
By Nick Denton
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6 comments

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ashkan at 05:46 PM on 05/07/07
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hate to break it to you nick, but timestamped june 23 2006:

http://www.watchmojo.com/web/blog/?p=212

technically, we claim ownership of the idea :)
tolles at 06:48 PM on 05/07/07
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The watchmojo guys aren't making the same key point you are here (which is that Yahoo should use Google's ads, and reap the monetization).

Rich Skrenta did, however, make this point back in January (which was referenced by lots and lots of people)

http://www.skrenta.com/2007/01/winnertakeall_google_and_th...

So -- yes, you're right -- but I'd contest the ownership of the odea...
ashkan at 07:17 PM on 05/07/07
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@tolles

in all fairness you are right, i saw that on skrenta when it came out and when i did was impressed with the analysis.

it was a "cleaner" idea than what we suggested... i don't think for the record a goog/yhoo acquisition/merger would fly anyway.

once in a while, amidst the props, we do need to bring Lord Denton back to earth, no? hence the reason for my post above.
junius at 08:27 PM on 05/07/07
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blah, this idea is as old as the hills. people internally have tossed this anecdote around for some time. for something like this to happen, my guess is most of the current execs would have to leave first, their egos are wrapped up in the "war" (if you can call it that) with google.
ashkan at 03:30 AM on 05/08/07
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junius, good pt.

one question though: did this war start before or after yahoo used google as its default and helped made yahoo what it is today? ;)
Funkalicious at 12:31 PM on 05/08/07
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Yahoo is still making a lot of money, so why panic and sell out? If their strategy or execution is at fault why doesn't the board fire the top ranks and bring in some new blood? There must be a few more smart people around, they are all not working for Google.

If Google becomes a monopoly in search they will pick off a bunch of profitable vertical markets and...does this remind us of another company, do we really want a Googlesoft?