The search and advertising industry could change drastically
over the next year if Microsoft has its way with Yahoo. In the last several
weeks, it was well publicized that Microsoft and Google went head on in a
bidding war for Internet advertising giant DoubleClick. Eventually, Google won
with DoubleClick for roughly $3.1 billion -- a sum that had analysts
questioning Microsoft's true motives.
At the time of the acquisition, Microsoft had roughly $25 billion of available
cash in its bank; more than double that of Google's $11.9 billion. Observing
these figures, it was odd to see Microsoft back out of a deal it could easily
win. "The best side to be on in a bidding war is the losing side,"
said legendary Wall Street tycoon Warren Buffet. Buffet is implying that the
loser in a bidding war has forced the winner to over-pay for something.
Today, Forbes is
reporting that Microsoft is in negotiations with Yahoo for a possible acquisition that could be worth $50 billion. According to
the report, Microsoft is feeling greater pressure to compete in the online
advertising space. Just recently, Yahoo announced its acquisition
of online advertising firm Right Media for $680 million. While this is far
from Google's $3.1 billion expense on DoubleClick, it does indicate that Yahoo
is already quite a force in online advertising.
Another sticking point for Microsoft is the fact that both Google and Yahoo are
ahead of the game when it comes to search. Microsoft has been playing catch up
to Google and Yahoo with MSN Search, but having Yahoo under its belt would
surely set the company onto a different playing field altogether.
Despite an impending deal with Yahoo, Microsoft hasn’t taken its eyes
completely off the Google – DoubleClick deal. Microsoft is loudly voicing its
opinion against the deal and has asked regulators to carefully monitor the
quote: Well Google has acquired almost 65% share in the advertisement field compared to 25% of combined share of Microsoft and Yahoo. So Google has got an edge here. Also its a fact that Google is somewhat dominating in the search market.