Techcrunch interviewed Citi Analyst Mark Mahaney On Yahoo/Microsoft/Google. It's a good interview although I tend to disagree with his conclusions.
Mahaney believes that Microsoft has no choice but to do the deal. He thinks it will give Microsoft the scale in online advertising that it needs to be a big player. Here are my current reasons for why Microsoft should walk from the deal:
- Two interior search engines comebined does not make a better one.
- Integration problems will set the companies back years and a lot can happen online in years.
- Google is salivating, waiting for the companies to merge and become distracted. Watch Google grow.
- Large tech mergers seldom work.
- Most mergers seldom work and often destroy value.
- Major culture clash - Silicon Valley and Redmond - forget about it.
- Yahoo's search engine is inferior technology and its ad inventory is losing value.
I've lived through several larger mergers and they are a huge distraction. Instead, Microsoft should focus just a couple billion of the money it was going to spend on Yahoo and focus it on building a better search engine and on building out a social networking platform. These are future areas of growth and Yahoo doesn't provide either of them.
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