Google's success is driving Microsoft's bid to buy Yahoo! Google came to dominate search and the nascent world of online advertising. On their own, the best efforts of Microsoft and Yahoo! haven't made a dent. The merger almost appears an act of desperation on the part of Microsoft, which has been largely baffled by the online world. Here are five reasons, even if it comes to pass, that the combination is unlikely to unseat Google anytime soon.
Brand: Google got there first. Microsoft and Yahoo! as well as upstart Ask.com, do a great job at returning good search results. But people are conditioned to think of Google as the place to get quick answers. "Google has the mind share," says Chris Sherman, executive editor of SearchEngineLand.com. Microsoft and Yahoo! will always appear stodgier next to the flash of Google, unless Google stumbles.
Technology: Microsoft and Yahoo! have built effective search formulas, and combining their masses of back-office servers would suggest they could outclass Google. But unlike its competitors, Google is primarily about one thing— good search results. The company continues to return results that satisfy its users, and nobody better encourages innovation.
Culture: Two strikes here against the merger. Microsoft's business orientation is vastly different from Yahoo!'s background as a media company. "It's like trying to get a scientist working with a snowboarder," says Gene Munster, an equities analyst with Piper Jaffray & Co. And yet, both are stilted compared with Google, whose wide-open atmosphere and employee satisfaction are well known.
Merger: Combining two companies with 90,000 employees would, to say the least, prove distracting. It comes at a time when online advertising is expected to enter a phase of fast acceleration. "Even the perception of a diversion could wind up delivering business to their competitors," writes Andrew Frank, research vice president at Gartner.
Beyond search: Banner and multimedia spots should be the fastest-growing ad sector on the Web. And that's where a merged Yahoo! and Microsoft might gain its best advantage against Google. It could benefit from combined expertise in managing sites, as well as selling banner ads for its sites and those of others. But Google's pending purchase of DoubleClick would give it a significant boost in display ads.