As you will no doubt have heard Microsoft has today offered to buy Yahoo! for $44.6 billion to create a “more efficient” company with total annual synergies of $1 billion. Microsoft says it has a plan to integrate employees and “retain” key Yahoo engineers and the top people. But the regulatory implications don’t end at the SEC. The European Commission is already mounting an antitrust investigation into the tech giant over its .Net framework, Office Open XML (OOXML) document format and various server products. The European Commission has also officially started its antitrust investigation into Microsoft’s tying of Internet Explorer to Windows.
The Yahoo buyout would – in addition – attract a different kind of regulatory interest, based on the media implication of the Redmond giant owning two major portals, MSN and Yahoo, in the various EU countries. However, since Google’s search engine dominates in the UK on market share, a Microsoft/Yahoo combination is likely to be welcomed as a more robust competitor, at least in the UK.
As for the merging of the Microsoft and Yahoo workforce, both have significant marketing sales operations and engineering operatiosn in Europe. Microsoft has a big facility just outside of London with plenty of engineers, an R&D facility. Yahoo’s European operation has a mix of sales and engineering across Europe.
UPDATE 12.30pm: (corrected) Microsoft have around 1200 permanent Irish staff, 500 contractors and Yahoo has around 600 permanent staff in Ireland. In the UK Microsoft has around 2,000 employees and countless contractors. Prior to this new Yahoo was planning to cut 1,500-2,500 post globally, but no specific figures were announced for its Yahoo! UK & Ireland operations.
UPDATE 1pm: Yahoo’s UK press office told me “We are not making any comment on anything at this time.”
UPDATE 1.10pm: Yahoo owns Kelkoo, a shopping price comparison engine, which spans Europe. MSN runs its own shopping comparison service. Since Kelkoo sits outside the Yahoo brand, it’s likely Kelkoo would be shut down and its commercial relationships passed to MSN.
UPDATE 1.37pm: Google’s press office: “No comment.”
I guess it was in the air, Arrington nailed down pretty clearly the possible options for Yahoo! yesterday during happy hour: http://www.techcrunch.com/2008/01/30/lets-trash-yahoo-during-happy-hour/
I don’t see that they have any powers over this one because the sale/merger is a US one. They could argue that the joint venture would still not be a market leader in search.
On a side note, the combined search tech could be quite interesting, with both companies employing some smart people in this area and both companies working on the future of search google should worry.
interesting TC didn’t cover the google results yesterday which show the writing is on the wall for its growth.
Immaculate timing on the deal from Microsoft, but I can see a lot of hurdles coming up for any merged entity.
1) Privacy issues in EU especially Germany
2) Monopoly issues (Globally – mainly EU & US)
3) Integration issues (Yasoft? Microhoo? 11,000 Yahoo employees + 79,000 MS)
4) Branding & Strategy (What does Mahoosoft do?)
Microsoft have always been excellent at marketing, and Yahoo sorely needs to improve that – but the track record on product integration and monetising their acquisitions is not all that rosy for both corporations.
By the way, did anyone else notice that Yahoo’s Chairman stepped down yesterday? http://uk.reuters.com/article/industryNews/idUKN3164523820080201
Don’t forget Kelkoo
This could be interesting from the standpoint of Instant Messaging. While AOL’s AIM service is the world’s largest (well, last time I looked it was), that was solely on the back of its massive market share in the US.
Across Europe, Microsoft dominate in the IM space, with Yahoo second and AIM third. And the last time I looked, Skype hadn’t even been launched, so I would imagine that Skype would be 2 or 3 – at Yahoo or AOL’s expense.
A Yahoo+MSFT merger would consolidate IM dominance in Europe, and offer a credible threat in the US.
Let’s hope MSFT doesn’t mess around too much with some of the Yahoo properties like Flickr.
Yeaeaeay! We’ll finally get Mahoo! messenger!!!
Lol…. seriously though, this could be the best thing that could happen to the roadkill that is Yahoo! Also, a combined effort in this case will be actually competitive, so I can’t see them having trouble getting regulatory approval for the search side of things. Email, Instant Messaging, Shopping etc could be a bigger hurdle.
Media reports here suggest 1200 permanent irish staff, 500 contractors and 600 Yahoo perm. staff in ireland alone.
When someone suggested Yahoo should get more into mashups I’m not quite sure this is what they meant….
Mike Butcher: “but Yahoo’s European operation consists largely of ad sales rather than engineering”
Do you have a citation/reference for this?
The days of price comparison engines living alone from the major search engines, is over. Kelkoo et al have already found it increasingly difficult to get natural seo traffic due to search engines not wanting to send users to another set of search results, which pushes them to increasingly more expensive ppc with very low margins. Even now google product results and prices appear more in their search results – where most shopping journeys start. The play should be to merge mahoosoft search with kelkoo results for prices on products.
That of course leaves Crowdstorm to dominate the product review platform space
Microsoft trying to break a monopoly … Yahoo is worth the 44 billions just for the irony of that.
Unless the balance has massively shifted since I left Yahoo Europe in 2006, I’d very much doubt ad sales make up even close to half of the workforce in Europe.
Yahoo at that point had hundreds of engineers in Europe, including a fairly large team in London, as well as large teams in France (after the Kelkoo purchase) and smaller teams in at least Germany, Italy and Norway – I’m sure there were more locations. Then there’s also product management and a ton of support functions that also has a significant presence in Europe.
Well if I understand the rumors correctly, yahoo have been trying to sell Kelkoo for about 6 months….
Wow! Another uplift for the software industry.
See Phil W’s post on the Yahoo selling Kelkoo from an insider perspective:
http://blog.crowdstorm.com/yahoo-selling-kelkoo-or-divesting-as-they-call-it/282