- Microsoft and Yahoo were never more than a small part of the exit opportunity anyway.
- A merged Microsoft/Yahoo will be so slow-moving it will create more opportunities for competition than it destroys.
Andreesen certainly knows about slow-moving behemoths making wasted acquisitions; Netscape was acquired by two companies (AOL and Sun) that both dribbled away the parts they respectively acquired.* However, I think he and a lot of other observers are missing something this time — the Microsoft/Yahoo synergies are too large to ignore.
*The legalities of the merger were a lot more complicated than that, but in essence AOL got the “internet” piece of Netscape and Sun got the enterprise side.
Given the opportunity, here are some reasons I think integration would go a lot better than most people think:
- Search relevancy algorithms are essentially collections of clever tricks, tested against actual search indexes and results. Integrating two companies’ operations in that regard shouldn’t be hard.
- The same goes for algorithms to determine contextual relevancy for ads.
- Microsoft has a lot of resources to reinvent the search interface. Yahoo isn’t much of a player there. Not a big integration problem.
- The next successful marketing campaign for a search engine — other than search box placement and word of mouth — will be the first one. Merger integration is the least of the problems in that area.
- The same goes for most other marketing of online services.
- Antispam — see search algorithms.
- Integration of web search, enterprise search, email, instant messaging, group chat, other social networking, and a partridge in a pear tree — OK, I admit it, this one is both central to my synergy argument and easy to screw up. But painful though it will be, I think Microsoft/Yahoo is more likely to do it right than anybody else is. I hope my reasons for thinking that will become clearer as I spell out what “doing it right” actually entails.
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