The Big 3

When it comes to search engines and search engine optimization, most of the people refer to the search engines as”the big 3″, because the majority of the searches are done via the big three search engines: Google, Yahoo! and MSN. Although Google is #1 with a very comfortable lead in market share (it already controls nearly 60 percent of the U.S. search market), MSN and especially Yahoo! are still “players” in the market.

The Big 2?

Despite broader economic worries about an economic slowdown and a drop in online traffic, Microsoft (the owner of MSN) is attempting the biggest-ever technology takeover. Today (February 1, 2008), Microsoft Corp. has proposed Yahoo Inc. an unsolicited takeover offer of $44.6 billion in an attempt to compete with Google in a market that may almost double to $80 billion by 2010. The offer includes a 62 percent premium to Yahoo’s closing stock price on Thursday, January 31, 2008. This is not the first time Microsoft Corp. tries to takeover Yahoo! Inc.; one year ago, Microsoft’s offer was rebuffed by Terry Semel who just resigned as Yahoo!’s chairman.

Steve Ballmer, Microsoft’s CEO wrote:
“Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers …”

No matter how this goes, I’ll just stick a note on my monitor to make sure I will not forget …

Note to self:
Invent something that can be later sold for around 46 billion

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Update February 2nd, 2008:

How is Yahoo! responding to the unsolicited bid? Here is a comment from the FAQ issued by Yahoo press:

The Yahoo! Board is undertaking a deliberate review process. They’re going to take time to thoroughly evaluate the proposal in the context of Yahoo!’s strategic plans. This will include evaluating all of the Company’s strategic alternatives – including maintaining Yahoo! as an independent company. That process will take some time, but the Board will ultimately pursue the option that it believes can best maximize value for our shareholders.

Update February 3rd, 2008:

What is Google’s position on the issue? Here is a comment from the official Google blog:

… Microsoft’s hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It’s about preserving the underlying principles of the Internet: openness and innovation. … We take Internet openness, choice and innovation seriously. They are the core of our culture. We believe that the interests of Internet users come first — and should come first — as the merits of this proposed acquisition are examined and alternatives explored.

Update February 9th, 2008:

Yahoo has rejected Microsoft’s $44.6 billion offer. The Wall Street Journal reports that:

… a Yahoo source says that the Board felt that Microsoft was trying to “steal” the company. The same source stated that Yahoo wouldn’t consider an offer below $40 per share which would cost Microsoft another $12 billion.

Update February 11th, 2008:

Microsoft responds to Yahoo:

It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. … The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

Update February 19th, 2008:

In an escalation of its fight for Yahoo, Microsoft will authorize a proxy fight at the Internet company this week, people briefed on the matter told DealBook. Unless Yahoo quickly reverses course and enters into talks, Microsoft would then seek to nominate a slate of directors to Yahoo’s board by March 13, the final deadline for nominations, and pursue a lengthy campaign to oust the board.

The move, expected to cost about $20 million to $30 million, was Microsoft’s alternative to raising its $44.6 billion bid and is seen as a less expensive way to put pressure on Yahoo’s board. Yahoo rejected Microsoft’s original offer as undervalued.

To be continued …