Maryam who you may know as the good looking one in the Scoble house, asks "Are they Crazy" in response to Yahoo turning down Microsoft’s buy out offer.
No Maryam Yahoo is quite sane. While $31 a share is a better price than Yahoo is getting on its stock at the moment, Yahoo is unlikely to benefit from a merger with Microsoft.
Microsoft hasn’t really figured out how to make money online. Neither has Yahoo. So merging the two companies is unlikely to create a power house, but rather compound the issues they both already have.
The biggest thing Yahoo has going for it is Mail. And Yahoo users are unlikely to like running the Microsoft Live Mail, so the only benefit there would be a unified Advertising front.
Yahoo’s communities, Dating, Games, Answers, and Yahooligans could be made immensely profitable if they could unify their profiles and data.
The problem that both Microsoft, and Yahoo face every day is that they are a collection of Pillars. The teams don’t collaborate, they don’t build on each other’s technologies.
Google on the other hand knows that it’s core business is Data. Everything Google does is about how to get more data about what users are doing, and then figures out how to monetize that information later. This leads to a lot of cross group and cross product collaboration.
Google Merging with Yahoo would be an unstoppable force on the Internet which is why the FTC would never let it happen. Who Yahoo really needs to merger with, that would also make Microsoft and Yahoo share holders happy about. Facebook. Facebook doesn’t know how to monetize yet, but they could learn that, what face book has going is that they are sharing data, too much at the moment, I get a headache from the overload of information about my friends everytime I log in to facebook, but… stay with me on this….
Imagine you are looking for a Date. If you used Yahoo Singles with Facebook integration the service could know if your friends are compatible, I would pay big money for that feature alone.
Imagine you are looking to buy a car, a degrees of separation number could come up, so that you could see if your friends would be willing to buy a car from that person.
The possibilities are endless, and the possibilities would add value. Value you can monetize.
Microsoft doesn’t need Yahoo. It needs Facebook. But it needs Facebook to have free reign to use it’s technologies to make block buster web applications. It needs Facebook to be it’s new Bungie.
Yahoo on the other hand needs to find a middleware company and buy them and make all of its parts speak the same language so it can aggregate data.
This post is in response to: Maryam on Yahoo’s rejection of Microsoft