Microsoft and Yahoo Vs Google

Posted Friday 1st February 2008 by Tom P in SEM News.

It is believed that Microsoft sent a letter earlier this week to the bosses of Yahoo making them an outstanding offer for the company. The offer was £22.4 billion and has shocked many commentators. The reason it has stunned so many is because of this amount is a whole 62 percent more than what Yahoo’s shares are actually worth.

Yahoo shares have been steadily falling as the company is failing to meet the competition offered by rival Google. The Yahoo board announced earlier in the week that they would have to invest $300 million in attempt to revive the company.

Microsoft, also failing to compete with the dominant Google, is clearly hoping that by combining their efforts with Yahoo a realistic rival could be created. This however may once again cause competition lawyers in the US and Europe to question Microsoft motives. Something Microsoft could ill afford with numerous investigations into their business practises in the last twelve months by various commissions.

One commentator has argued that the deal was forced by the tumultuous rise of Google in both Microsoft’s and Yahoo’s spheres of influence. The dominance of Google has led the two companies into this position. Although the deal was suggested by Microsoft a year ago it is not until now that Yahoo have seriously considered selling up to the industry giants.

Opinion is split over why Microsoft has offered so much for what is in effect, a business in serious decline. Some have argued that the two company’s services are totally incompatible in a business sense while others are heralding it as the reintroduction of competition in the evermore Google dominated marketplace. Whatever your opinion may be, with an offer that large, Google bosses must be considering this proposed new threat as a prospective problem.

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