Yahoo's stock plunged nearly 20 percent this morning after a weekend in which a snubbed Microsoft dropped its takeover bid. But here are reasons that both companies—and consumers—benefit in the long run.
Shotgun weddings don't make for happy couples. That's especially true when the families merging have been feuding for years and come from cultures as different as Microsoft's button-down orientation and Yahoo's wilder, dot-com roots. The merger's challenges would have negated any benefit to Microsoft, which can find much better ways to spend its billions.
Yahoo is left free to pair with AOL. If these two merged, they might appear to be two stumbling drunks trying to hold each other up. But at least their shared, online pedigree would have them leaning in the same direction from the start.
Microsoft can get back its Vista. Or not. The current version of Windows may be too far gone, with real and imagined problems that will stymie sales in the crucial corporate market. Microsoft must refocus on its core business of desktop software. A stumble on the next Windows version, and the company will have lost any advantage it has in the shift to online computing.
Google gets real competition. The merger would have distracted Microsoft and tanked Yahoo, potentially clearing the field for the upstart giant. Sure, Google has maintained a warmer, fuzzier image than either of its major competitors. But monopolies are bad things.
A humbler Microsoft is a better Microsoft. The company has already opened itself to working more with others. Part of that is because of pressure from European regulators. But Microsoft has independently shown willingness to share its technology's underpinnings and to adopt more open standards. Both seem more likely if it isn't suddenly much bigger with an absorbed Yahoo.
No more talk of Microhoo! OK, Microsoft surely didn't intend to change its name after the merger, and it was just silly pundits exhausting us with the funny name combos. (Now it's MicroNoHoo!) But maybe Microsoft would have adopted that annoying, boasting, style-stunting exclamation point that "Yahoo!" thinks it has a right to.