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July 16, 2008

Yahoo and Microsoft to fight over AOL acquisition?

Posted by David Hunter at 2:45 PM ET.

AOL logo 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.

Filed under AOL, Acquisitions, Coopetition, Google, Yahoo

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July 3, 2008

Let’s make a deal!

Posted by David Hunter at 6:57 AM ET.

A little pre-holiday humor from Henry Blodget – Yahoo, Microsoft, Time Warner, News Corp, and AOL Agree To Talk Forever And Never Do Anything:

All major Internet companies not named Google are in talks about mergers, partnerships, spinouts, and other proposals to quiet irate shareholders and stop getting their butts kicked, says the WSJ. No news on when they finally plan to stop talking and actually do something.

Those of us of sufficient antiquity can remember a time in the early 90′s when one could have said something quite similar:

All major PC software companies not named Microsoft are in talks about mergers, partnerships, spinouts, and other proposals to quiet irate shareholders and stop getting their butts kicked. No news on when they finally plan to stop talking and actually do something.

Of course, all the corporate couplings and reorganizations did no good for Microsoft’s competitors then and I don’t expect them to do much for Google’s competitors now. Blodget’s suggestion is that Yahoo skip the palaver and concentrate on straightening out their business which seems eminently sensible, but increasingly unlikely due to all the distractions for both management and staff.

Filed under AOL, Acquisitions, Coopetition, Google, Microsoft, MySpace, News Corp., Yahoo

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April 10, 2008

New plot twists in Microsoft-Yahoo soap opera

Posted by David Hunter at 12:16 AM ET.

Just when the plot in the Microsoft Yahoo acquisition soap opera was getting a bit stale, some new twists were added today leading off with Yahoo announcing that they would be stepping out with Google for a two week trial run of Google ads on Yahoo search. The Google ads are only supposed to appear on 3% of Yahoo’s US search queries during the trial, but this solution has been advanced before as a way for Yahoo to leapfrog the problems with its troubled search ad infrastructure and make some real money off the Yahoo search gold mine. Needless to say, wannabe suitor Microsoft was displeased to hear that Yahoo was still playing the field and raised fears of a monopoly without actually using the “m” word.

Then to add insult to injury, word leaked out that Yahoo is pursuing nuptials with Time Warner’s AOL unit:

Under the terms being discussed between Yahoo and Time Warner, the latter would fold its AOL unit into Yahoo and make a cash investment in return for about 20% of the combined entity, people familiar with the situation said. The deal, which wouldn’t include AOL’s dial-up access business, would value AOL at about $10 billion. As part of the deal, Yahoo would use the Time Warner cash and additional funds to buy back several billion dollars worth of its own stock at a price somewhere in the middle of the range between $30 and $40 a share, the people said.

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.

Still, it’s all up to the Yahoo shareholders and which way they jump will mostly be determined by how much money they get upfront and not in some halcyon future. In that regard, Microsoft is rumored to be in talks with Rupert Murdoch’s News Corp. about merging MSN, Yahoo, and MySpace presumably with the objective of having News Corp. help Microsoft offer more for Yahoo. Since Google has the MySpace search ad contract and Microsoft owns part of MySpace competitor Facebook, such a plan would provide even more fireworks.

Stay tuned – there’s apparently life in this plot yet.

Filed under AOL, Acquisitions, Coopetition, General Business, Google, Governmental Relations, Microsoft, MySpace, News Corp., Yahoo

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April 16, 2007

Microsoft tries to break up Google’s DoubleClick nuptials

Posted by David Hunter at 10:24 AM ET.

The sight of Google carrying off DoubleClick to the altar has driven rejected suitor Microsoft to extreme measures – an appeal for antitrust regulators to get involved to stop the wedding:

Microsoft has released the following statement by Brad Smith, Senior Vice President and General Counsel, Microsoft Corporation, on the proposed acquisition of DoubleClick by Google:

“This proposed acquisition raises serious competition and privacy concerns in that it gives the Google DoubleClick combination unprecedented control in the delivery of online advertising, and access to a huge amount of consumer information by tracking what customers do online. We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market.”

Even more indicative of the chagrin in Redmond, they rounded up some other aggrieved parties this weekend:

Executives at the software giant said they talked over the weekend with AT&T, AOL and Yahoo about similar concerns.

and even arranged for Brad Smith to be interviewed on Sunday by the NY Times. So far only AT&T has actually weighed in with a public support statement:

“We think antitrust authorities should take a hard look at this deal and the implications,” said Jim Cicconi, senior executive vice president for external affairs at AT&T. “If any one company gets a hammerlock on the online advertising space, as Google seems to be trying to do, that is worrisome.”

Next step:

The initial antitrust review of a merger lasts 30 days. It is not yet clear whether the Justice Department or the Federal Trade Commission, which share antitrust regulatory duties, will review the Google-DoubleClick deal.

Any review of a merger on antitrust grounds begins with a determination of the “relevant market” in which the two companies operate. “That is the first hurdle in case like this,” said Andrew I. Gavil, a law professor at Howard University, “and it looks as if DoubleClick may well be in a nearby, or complementary, market instead of the same market as Google. And then the question will be how easy it is for new entrants to compete in the online advertising markets.”

The WSJ (subscription reqd.) suggests that Microsoft hopes to raise enough objections that the regulators will make a “second request” for information from the parties, which may kill the deal and will certainly slow down the process. Hmm, I wonder if the folks in Redmond have tried Neelie Kroes at the European Commission yet?

More on the role reversal theme from Paul Kedrosky:

To borrow a phrase from Microsoft’s past, this is a brazen attempt to cut off Microsoft’s future air supply. The latter company is losing share in search, failing at ad placement, trying to find a new leg to growth, and generally floundering expensively in these crucial new fast-growing markets. What better way and time for bid-’em-up Brin to stick the knife in deeper every time Microsoft spots a possible life raft than for Google to buy the target acquisition company — like DoubleClick — out from under Microsoft.

This was, in other words, a strategic and offensive buy, not a financial one, even if you can make a financial quasi-justification for the price. Google is playing very hard ball with Microsoft, deploying brutal tactics right out of the Redmond playbook, circa 1995. Call it $2-billion for DoubleClick’s revenues and customer list, plus another $1-billion for a pinched air tube to Microsoft.

Kedrosky’s take is that if the deal goes through Microsoft will shortly be considering an acquisition of Yahoo, a view also advanced by Larry Dignan earlier this month.

Filed under AOL, AT&T, Acquisitions, Antitrust, Coopetition, DoubleClick, General Business, Google, Governmental Relations, Legal, Microsoft, Yahoo

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