Microsoft News Tracker

As if all the squabbling over a Yahoo acquisition weren’t enough, today there were rumors that both Microsoft and Yahoo were in urgent talks to acquire AOL from Time Warner:

Time Warner Inc’s (NYSE:TWX) discussions to merge or sell its AOL Internet division with Microsoft Corp (NasdaqGS:MSFT) or Yahoo Inc. NasdaqGS:YHOO) have taken on new urgency ahead of Yahoo’s Aug 1 shareholders meeting, a source familiar with the discussions told Reuters on Tuesday.

The structure of any deal is not immediately clear, though a combination of any of the parties is expected to redraw the landscape for advertising on the Internet.

Sources had said earlier that a deal with Yahoo would likely involve merging AOL with the Web pioneer, with Time Warner taking a minority stake in the combined company. A deal with Microsoft would likely be a sale of AOL, the sources said.

Time Warner and Microsoft declined comment. A representatives of Yahoo was not immediately available.

An AOL purchase would represent traffic acquisition and added display advertising strength for either party which would presumably help keep Carl Icahn off Yahoo’s back or further Steve Ballmer’s “big bet” on the consumer side of the Web. The last time the Yahoo part of this particular rumor cropped up, I observed that

You may recall that Google owns 5% of AOL and handles their search ad business so Yahoo acquiring AOL and running Google ads would create a surprisingly homogeneous “content” and search company although not obviously a wildly profitable one.

and nothing has changed since then except the amazing possibility of a bidding war.

Yesterday, the head lawyers for the protagonists in the Yahoo acquisition soap opera headed off to Washington for testimony before both House and Senate committees, but it turned out to be one of the least exciting episodes so far. Brad Smith (Microsoft’s General Counsel), David Drummond (Google’s Chief Legal Officer), and Michael Callahan (Yahoo’s General Counsel) all delivered predictable prepared testimony as to whether Yahoo’s search advertising deal with Google indicated creeping monopoly or was just an ordinary business transaction that would provide better advertising for both consumers and advertisers.

The biggest excitement was provided by Brad Smith quoting Yahoo CEO Jerry Yang:

Yang "looked us in the eye," Smith said, and told Microsoft executives, "The search market today is basically a bipolar market. On one pole there’s Google, and on the other pole there are Yahoo and Microsoft both competing with Google. If we do this deal with Google, Yahoo will become part of Google’s pole, and Microsoft would not be strong enough in this market to remain a pole of its own."
…
Senators quickly bored in on Smith and Callahan, saying that Yang’s "bipolar" comments, if substantiated, were startling.

"This is pretty explosive stuff," said Sen. Herbert Kohl, D-Wis., chairman of the antitrust subcommittee, who reminded the witnesses they were under oath.

Smith said he repeated "exactly what Mr. Yang said." After the June meeting, Smith recalled, Microsoft chief executive, Steve Ballmer, told him "He (Yang) said there’s only going to be one pole in the market. I guess that would be a monopole, wouldn’t it?"

Callahan was pressed to respond by Sen. Arlen Specter, R-Pa., a former prosecutor. At first Callahan said "it would not be appropriate to comment on Mr. Smith’s accuracy." Then he said he could not recall Yang’s comment.

Good punning on Mr. Ballmer’s part, I’d say, but none of the solons called for storming the gates at the Department of Justice on behalf of either Microsoft or Yahoo-Google so this was merely all for PR value.

Microsoft has thrown open the doors to their Live Mesh technology preview and anyone in the USA can sign up at www.mesh.com if they have a Windows Live ID. Outside the USA will work too, if you are "willing to change your Windows operating system region and language setting to EN-US."

If you are having trouble keeping track, Live Mesh is Microsoft’s Software+Service data synchronization platform announced in April. Sarah Perez (the first link above) describes what you can do with the current preview:

With Mesh running on your computers, you can simply right-click any folder and choose "Add to Mesh." By doing so, that folder and all the files it contains are synchronized with all of your other computers you’ve added to your personal Mesh. It also syncs those files to the Live Mesh Desktop, which is Mesh’s "cloud" - an online web site you can access from any computer. At the moment, the online storage is limited to 5 GB, but that could change in the future. However, Mesh’s recent update allows you to set folders to sync via peer-to-peer, bypassing Live Desktop. When folders are Mesh-enabled, a small panel appears to the right of the folder in explorer which catalogs any changes to the folder (file adds/moves/deletions) as well as notes and comments left by any of the folder’s members.

Live Mesh also lets you access all your “meshified” computers remotely, so if you have software that is installed only on one PC, you can use Live Mesh to access that computer as interact with it as if you were sitting in front of it.

I would have to observe that Live Mesh is required because Microsoft is inextricably tied to applications running on clients which makes synchronization a necessity to compete with applications running in the cloud, a lesson Microsoft has already acted on with Office Live Workspace. However, since today most folks aren’t using cloud applications anyhow, Live Mesh seems very useful.