Rumors abound of Yahoo and Microsoft Merger

Many sources since Friday have been reporting that US software giant Microsoft Corp and web portal Yahoo Inc are exploring a merger or alliance to better compete against Google Inc, but both are remaining tight-lipped about the rumors.

Yahoo’s share price leaped approximately 18 percent as the reports leaked; whilst Microsoft’s slipped slightly after the Wall Street Journal and the New York Post reported that the technology titans might unite to take on Internet search powerhouse Google.

The Journal backed off the report late on Friday, citing anonymous sources as saying that merger discussions took place in recent months but ‘are no longer active’ but the two companies ‘may still explore other ways of cooperating’.

The rumors are at odds with the mood at Yahoo, where morale and optimism have been buoyed in recent months with the successful launch of its new Panama online advertising platform.

Several sources state that when contacted, representatives from Yahoo and Google said they would not comment on speculation or rumors.

Some analysts were skeptical of the notion of an acquisition, saying Yahoo was regaining its footing in the market after a rough patch and had little to gain by selling out to Microsoft.

“Count me among the skeptics; I don’t think it’s going to happen”, said analyst Matt Rosoff of Directions on Microsoft, which tracks the firm.

“I don’t understand what Yahoo would get out of the deal, and there are people there who don’t want to work for Microsoft,” he said.

Yahoo co-founder Jerry Yang is reportedly among those averse to working for Microsoft, which technology entrepreneurs in California’s famed Silicon Valley area notoriously regard as a menacing institutional empire.

Matt Rosoff expressed his opinion that “Microsoft and Yahoo could easily be discussing some kind of partnership, perhaps in the area of Internet search or e-mail, where Yahoo has profited and Microsoft has suffered”.

“An outright acquisition would be very expensive, the future growth is not there; there are different cultures, and there is a ton of overlap, implying one would have to shut down what they have to offer.”

At an informal gathering in San Francisco on Thursday, Yahoo executives spoke enthusiastically about the company’s confidence in Panama and told of plans to roll out a host of new products and services.

A year ago, the two had explored the idea of combining to form a greater competitor to search-engine giant Google, but the talks “led nowhere.

Combining the online search engines of Yahoo and Microsoft would give the companies about a quarter of a market ruled by Google.

In March, Google commanded a 48 percent share of the US search market, trailed by Yahoo at 27.5 percent and Microsoft at 11 percent, according to the latest data from comScore Media Metrix.

It is said that Microsoft and Yahoo are strongly motivated to find ways to dethrone Google and the combined mass of the two companies’ client and consumer bases could generate a viable competitor to Google on both the desktop and the mobile device.

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