Microsoft battle Google with £22.4bn Yahoo! bid

Microsoft's £22.4 billion bid to buy Yahoo! is set the most significant attack that Google has ever faced. Google dominates the search industry and as a result has chief control over the internet. This dominance has greatly frustrated Microsoft. Microsoft is desperate to claw back some credibility in the search industry and have been trying to develop strategies to counter Google's authority. Google's competitor Yahoo! has recently been struggling. Due to minimal growth have been forced to lay off 1,000 of their 14,000 strong workforce. As a result the value of the company has been plummeting. This window of opportunity is a welcome chance for Microsoft to combine forces with Yahoo in an attempt to counter Google's dominance.

Combined forces

Microsoft CEO Steve Ballmer wrote a letter to Yahoo!'s board of directors tabling a £22.4 billion (44.6 billion) bid for the company that was once the dominant player in search. If the bid goes through many of the companies' services could be merged. Hotmail and Yahoo! Mail could combine to incorporate the best of both services and Microsoft could make their Word word-processing and Excel spreadsheet tools available online.

Yahoo!'s mistakes

2007 saw Yahoo!'s revenue grow by a tiny 8%. In a year when global internet advertising grew 32% and Google saw a growth of 55% it was not good enough. Analysts have blamed the lack of success of the company on a combination of poor strategic decisions by management and that their service has been trying to do too much. One major strategic mistake happened in 2000. The company failed to recognise the potential of search and powered their search through Google. At this time Microsoft and AOL were also diverting traffic through Google and as a result they were all partly responsible for creating the monster that it has now become. Throughout this time Yahoo! has also suffered as it has tried to compete in too many areas of the market. As a result it has become master of none.

Laying down the gauntlet

The move by Microsoft is a significant step toward disrupting Google's empire. With a purse that can make the £22.4bn offer with cash; Microsoft can walk the talk. If the deal goes through it will be the technology industry's largest takeover. The offer is yet more recognition of the value of search. Technologies major players are clamouring to have a part of this multi-billion dollar service. The dot com boom may be a thing of the past but a new search engine battle has just begun.