Microsoft/Yahoo! roundup

Note: this thread summarizes what others are thinking, and my reactions. My opinion on the potential acquisition is here — and along with many others’, on MiniMSFT.

Andy Borowitz has the biggest news: Obama to buy Yahoo! Other than that …

Microsoft has been fined a record €899 million ($1.4 billion) for defying the EU’s sanctions, which brings the total over the last few years to €1.68 billion ($2.5 billion). This is for past actions; Neelie Kroes, the Competition Commissioner, after noting that Microsoft was the first company that had ever defied the sanctions, then goes on to add that she hopes “that today’s decision closes a dark chapter in Microsoft’s record of non-compliance with the Commission’s March 2004 decision,” she added. Microsoft’s response is basically “we hope so too”, and affirming that as of October 2007 they believe they were in compliance.

Forbes has an excellent Q&A (including “how does one pay a sum that large?”). Felix Salmon suggests that this can help end Microsoft’s past tendency to view fines as a cost of doing business — once you get to the billions, things change. The Guardian has a handy timeline of the 10-year legal battle, which unsurprisingly the EU has won overwhelmingly.

This is extremely relevant to the acquisition because it contues the theme from the EU’s past ruling and Colleen Kollar-Kotelly’s extension of U.S. anti-trust oversight until 2009: despite progress, unacceptable behavior in the past can’t be brushed under the table. Regulators will be looking at the acquisition through this lens — and the burden should similarly be on Microsoft to show their openness announcements are for real.

Kristi Helm’s Microsoft could get Yahoo’s Web data about you in the Seattle Times brings up an important topic, and notes that “Congress also intends to explore it while looking at competition and antitrust questions of the proposed deal.” Good to hear. Mark Cooper, research director of the Consumer Federation of America, adds

“A lot of these Internet activities are in fact becoming highly concentrated duopolies,” Cooper said. “They don’t look like the competition we thought we were going to get.

“It’s time for public policy to re-examine this space because the number of alternatives has, in fact, been diminished.”

Indeed. Thanks largely to people like Peter Cullen, Frank Torres, Caspar Bowden, and Jeffrey Friedberg, Microsoft has a surprisingly good reputation these days in the online privacy space (at least as compared to Google) … but as the FTC Passport Consent Decree reminds us, that hasn’t always been the case.

Brian McAndrews (of aQauntive, recently promoted to Microsoft’s Senior VP for advertising and publishing) by contrast highlights that “a duopoly is better than a monopoly.” See, I’m not the only one who uses the word. Of course a true multi-player market would be better yet (at least from consumers and industry-wide perspectives, even if not for Microsoft and Google), but still the message is clear: “if there’s a duopoly, we’re #2.”

Preston Gralla in Computerworld suggests that contrary to their apparent reaction, Google really wants the deal to succeed. I agree that the integration would slow things down for a while, which is to Google’s benefit, and there may be some short-term hiring opportunities. Still, Google and Microsoft are in this for the long haul, and these are pretty transient advantages. One thing he didn’t mention is that by increasing Microsoft’s “Evil Empire” factor, this could take some heat off Google. Hard to know. A good contrarian view.

Saul Hansell reports in his New York Times blog that Randy Falco, CEO of AOL, thinks the deal’s a mistake. He sees it as primarily about Microsoft building up search share, and that it leaves AOL well-positioned on the display ad side. Faclo’s also projects some of AOL’s own past experiences:

“The AOL-Time Warner merger didn’t really work that well,” he said, deadpan. “You may have missed that.”

Gregg Keltzer reports in Computerworld on the major outage for Hotmail and many other Microsoft web sites just hours after “Bob Muglia, the head of Microsoft’s server group, bragged that ‘a good part of the Windows Live servers are running Windows Server 2008.’” In the mean time, ComScore says Google’s advertising numbers dropped drastically in January, although Google and Hitwise beg to differ.

Kara Swisher suggests that Microsoft could reprice their offer in light of Yahoo!’s new retention/severance offer; Henry Blodget similarly quotes an anomymous “valley bigwig” who points out that if Yahoo doesn’t lock in the deal and then blows this quarter too, the price could drop a lot further. Well, yeah; tactics look very Evil Empirish (and would work against the chances of successful integration and retention afterwards), so Microsoft may not go this route, but they clearly have the option. In go terms, Microsoft has sente. This also really does highlight Yahoo!’s dire straits.

Kara’s Defining Yahoo! beyond the pail is also a good read, and as a special added bonus includes a Chemical Brothers video. Hot dog! Blodget, by contrast, bizarrely focuses on 20% time as a symbol of Google’s problems. While he’s right that shareholders are likely to push back against luxuries when times get tighter, he doesn’t appear to understand the value of 20% time or how it fits into Google’s overall approach. Oh well, that’s why they pay him the big bucks. [For those who want to learn more about this, my friends at Google tell me that the notes from the 2005 Computers Freedom and Privacy session on 20% time are still relevant.]

And I’ll end an article by the only one of these authors I’ve met in person, Eric Lai’s Microsoft tries to steer a more agile course on software development, also in Computerworld. It’s got some great discussion with Soma Somasegar of the developer tools business. Soma’s been one of the leading proponents of increased transparency at Microsoft for several and is very honest here about some of the challenges they’re encountering. Culture, culture, culture!