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The rumors of last June that Microsoft was shopping around its Razorfish interactive ad agency that they had acquired with aQuantive were apparently correct as today Microsoft and Publicis announced that the latter is acquiring Razorfish for $530 million:
Steve Ballmer, Microsoft’s Chief Executive Officer, said, "We are grateful for the contributions Razorfish has made to our online advertising business since joining the company as a part of the aQuantive acquisition in 2007, and are pleased that they have found a new long-term home with Publicis Groupe. We look forward to continuing to work with Razorfish as one of our agencies, and we’re confident that as a part of Publicis Groupe, Razorfish will build on its success to date in the digital advertising industry."
There are various theories as to why Microsoft wished to divest themselves of Razorfish, but the "continuing to work with Razorfish as one of our agencies" rings true to me. Microsoft did not want want its ability to sell online ads to all ad agencies to be hindered by owning one themselves. The deal is expected to close in the fourth quarter of 2009.
After more false starts than I really care to recall, Microsoft and Yahoo today announced that they had reached an agreement to combine their Web search businesses to better compete with Google. The gist of the deal is that Yahoo is giving up on Web search and hiring Microsoft to handle it for them:
Not called out explicitly is what will happen to the Yahoo Publishers Network and Microsoft PubCenter which are rivals to Google’s AdSense in serving contextual ads to 3rd party publisher Web sites. Presumably, YPN is toast and the fledgling Microsoft PubCenter will assume their publisher relationships.
So where’s the pony? For Yahoo it is pretty clear – they dump the expense of running and monetizing a search engine while Microsoft pays them 88% of search revenue generated on Yahoo’s owned and operated (O&O) sites during the first 5 years of the agreement. (Also "Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country.") Yahoo used Google for search from 2000-2004 before they tried to do it themselves – now they have shuttered the in-house effort as a failed project and gone back to a "content site" strategy.
For Microsoft. however, the pony is all in the future. They have irretrievably made Steve Ballmer’s "big bet" on search and purchased a whopping chunk of search market share – approximately 28% compared with Bing’s current 8%. Now they will have to deliver on it. The press release does not explicitly state the conditions under which either partner can ditch this deal, but the chances of it in the next few years have to be exceedingly slim.
Finally, the partners apparently suspect a length regulatory review and the agreement is not hoped to close until early 2010.
The Financial Times is reporting that Microsoft has retained Morgan Stanley to find a buyer for Razorfish, the online ad agency it picked up when it acquired aQuantive a bit more than 2 years ago. Microsoft is not commenting on the story, but it would make sense since an ad agency is not a great fit for Microsoft’s main Web advertising business which is in the uncomfortable position of courting rival ad agencies. A possible buyer is the French marketing company Publicis Groupe which just last Thursday announced a "broad strategic agreement" with Microsoft.
There had been rumors of an asset swap for Razorfish with ad giant WPP Group in August 2008, but that never panned out and now that two years have passed since the aQuantive acquisition, favorable tax treatment would make an outright sale more likely. It also does not hurt that Microsoft might get $600-$700 million back on the hefty US$6 billion they overpaid for aQuantive.
Microsoft has announced the acquisition of "certain" assets (for an unspecified amount) of Rosetta Biosoftware, a business unit of Rosetta Inpharmatics LLC, a wholly owned subsidiary of Merck & Co. Inc.
The deal allows Microsoft to incorporate genetic, genomic, metabolomic and proteomics data management software into the Microsoft Amalga Life Sciences platform for enhanced translational research capabilities. In addition, Microsoft will establish a strategic relationship with Merck to enhance the Amalga Life Sciences platform to meet emerging pharmaceutical research needs.
…The deal is expected to close at the end of June 2009, and the new Amalga Life Sciences platform incorporating Rosetta Biosoftware technologies is slated to be available in early 2010. Microsoft is pursuing hiring Rosetta Biosoftware employees who can fill roles that are critical to the effective incorporation of Rosetta Biosoftware technologies into the Amalga Life Sciences platform. Until the deal is closed, Rosetta Biosoftware will continue to operate as a business unit of Rosetta Inpharmatics LLC, a wholly owned subsidiary of Merck.
Microsoft rebranded its healthcare software offerings as Amalga in February 2008.
