Billionaire financier Carl Icahn recently launched a proxy battle to oust Yahoo’s board of directors, responsible last month for rejecting a merger deal with Microsoft, in an effort to restart negotiations with the tech giant. Many of those opposed to a Microsoft-Yahoo merger have framed the potential partnership as one that would only benefit Microsoft, whose search technology has struggled since its inception.
Yahoo, however, stands a lot to gain from a partnership with software provider Microsoft, and this becomes apparent when one begins to understand the primary difference between #2-ranked Yahoo and its primary competition, Google. While both companies provide industry-leading search engine technology and other mainstays such as free email systems, they are clearly dissimilar in their primary objectives.
Yahoo, both currently and throughout its history, has been a content provider. From its news and finance service, to games, job listings, sports coverage, etc, the company’s focus is clearly built upon its ability to provide original online media. While Google has the ability to aggregate similar content, none is original – the company instead draws such content from outside sources; Yahoo’s ability to deliver in this field has likely been its saving grace in maintaining its #2 ranking among search providers.
Google, in fact, is not a content provider at all, nor has it ever tried to be. They are, in fact, an applications provider, and thus far are the most successful developer of web-based applications on the Internet. The robust applications backend that Google provides has allowed the once basic search engine to evolve into a powerhouse that many feel is the online equivalent of Microsoft in their ability to develop and promulgate their web services platform.
How would you compete with a company like Google? Enter Yahoo-Microsoft. With Yahoo bringing its search technology and content to the table, two areas in which Microsoft has historically struggled, the tech giant would be free to focus on developing an online applications infrastructure to rival that put forth by Google.
A merger between the two companies, if executed properly, would truly benefit both Microsoft and Yahoo. And inevitably, the competition that the new search megalith would create with Google would benefit consumers as well, as a revitalized Yahoo could once again prove a true competitor to Google, thus forcing both sites to improve the services they provide in an effort to stay ahead.