Microsoft-Yahoo to merge vs. Google?

James Ryan Jonas

If you’re Microsoft Corporation, what do you do to challenge Google’s dominance in the online advertising industry?
You acquire another search engine, albeit struggling, company such as Yahoo!.
That seems to be Microsoft’s plan when it submitted an unsolicited takeover bid of $44.6 billion.
The offer of $31 per share is a 62% premium to Yahoo! stock’s closing price on Thursday. Yahoo climbed $10.40 a share, or 54%, to $29.58 in premarket trading after the announcement.
Microsoft said the booming online advertising market “is increasingly dominated by one player” — a reference to Google — and suggested that by acquiring Yahoo, it can be “better positioned to compete in the online services market,” said Microsoft’s chief executive officer Steve Ballmer.
Yahoo issued a statement saying it will “carefully and promptly” study Microsoft’s bid.
If the acquisition pushes through, Google will definitely see a new competitive threat in the form of Microsoft-Yahoo. Google’s dominance of the online advertising market will be challenged because an alternative will then exist.
What does it mean to local bloggers who rely on Google Adsense income?
They will most probably be negatively affected and their earnings lowered because advertisers will now choose to diversify their online advertising expenditure. If previously they only used Google, they will now think about using the Microsoft-Yahoo network for online advertising too. That shift will cause a blow to Google’s bottom line and, eventually, to the income of Adsense publishers as well.
The only way to beat this is to continue building one’s Adsense income (which is becoming more and more difficult to do these days) or be part of the new Microsoft-Yahoo Publisher network that will emerge.
Is the Microsoft-Yahoo merger soon to become a reality? Watch out.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.