Microsoft Ready to Throw Big Bucks at Yahoo Search?

By: Jordan McCollum - January 24, 2009

Well, Microsoft, you just cut 5000 jobs and missed your Wall Street estimates. What are you going to do now? If you guessed they’re going to Disney World, you’re wrong. No, according to Steve Ballmer, they’re looking to drop some big bucks on Yahoo search.

Naturally, Ballmer isn’t naming his price quite yet. On the earnings call this week, however, Ballmer made no bones about the future for web search from Microsoft, according to the New York Times:

Asked about a deal with Yahoo on search during a conference call with investors early Thursday, Mr. Ballmer said, “We would like to do one.” And Mr. Ballmer sounded more optimistic about the possibility of coming to terms with Yahoo now that Carol Bartz, the former chief executive of Autodesk, replaced Jerry Yang as chief executiveof Yahoo. “I know Carol Bartz well from the Autodesk days and am glad to see her at the helm of Yahoo,” he said. Mr. Ballmer, who met last week with Roy Bostock, the Yahoo chairman, also said he had spoken with Ms. Bartz recently.

Why is he still interested after a year of drama and rebuffs:

Whether he succeeds or not [in getting his hands on Yahoo’s search business], [Ballmer] plans to continue investing in Internet search to take on Google.

There are some obvious draws for Microsoft, as there have been for nearly a year since their first offer to buy Yahoo. Rather than taking the time and money investment that building up their own search offering would require, they can increase their market share for only the cost of Yahoo’s search. Plus with their profit drop last quarter, they’re looking to do something to make their online offerings pull in more cash. And given what Microsoft Search has accomplished so far in its life, without purchasing Yahoo, can they ever really hope for the momentum it would take to challenge Google?

Yahoo, as always, has fewer incentives to deal. Sure, they’re struggling internally and we all know the path they’ve been on for the last year. But with a new CEO, there’s also a strong possibility that they’ll have the guidance necessary to forestall the crash that we’re all anticipating. Is it the right time to sell off a major part of their online offering just as they’re getting new leadership?

Yeah, we need someone to give Google competition. But ultimately, it may not be Yahoo, Microsoft or any combination thereof that can stave off a complete Google monopoly. What do you think?


Jordan McCollum

About the Author

Jordan McCollumJordan McCollum is a staff writer for the popular marketing blog Marketing Pilgrim. She has worked in search engine optimization with clients including 3M, Little Giant Ladders and ADP. After graduating from Brigham Young University, Jordan joined the SEO copywriting team at the Internet marketing firm 10x Marketing. After 10x closed its doors in December 2006, Jordan became a freelance writer and Internet marketing consultant specializing in SEO. She also has extensive experience with web analytics, conversion rate enhancement and e-mail marketing.

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