updated 09:20 am EST, Fri February 1, 2008
MS Yahoo Deal Call
Microsoft has been discussing the possibility of buying out Yahoo for a year and a half, the company has confirmed during a conference call discussing its proposed $44.6 billion deal. Confirming longstanding rumors, company PSD president Kevin Johnson says that Microsoft has been in an "off and on" discussion with Yahoo for 18 months. The search engine giant simply said roughly a year ago that it was not a good time to discuss an acquisition, Microsoft claims. The latter says it continues to believe a deal would be important to boosting the importance of search and expanding social platforms. Search is not just about "ten blue links" anymore, Johnson explains. Notably, Microsoft has recently invested in Facebook as part of these efforts.
However, the call also made apparent Microsoft's predominant concern in the deal, which is to undermine Google's perceived control of the web ad market. Johnson stressed that advertising was "key" to commercializing web services and warned that the industry was "dominated by one player," deliberately withholding Google's name from the discussion. Acquiring Yahoo is said to provide both it and Microsoft an opportunity to scale upwards at the rate necessary for the business, particularly in server software and other areas which Microsoft has historically been successful.
Microsoft also believes there to be incidental benefits for Yahoo outside of search and advertising, such as advanced research and development for Yahoo's mobile platform as well as its video services.
Despite the Microsoft claims, Yahoo has responded with caution to the deal, according to a brief company statement. The Bay Area company appears to contradict Microsoft's assertion of long-running talks and describes the deal as "unsolicited." Yahoo has not rejected the deal out of hand but says it will determine its answer "carefully and promptly" to ensure that a takeover by Microsoft is in its best interests.