Microsoft's Next Move: Legal Onslaught Then...Ask.com? Digg? Facebook?

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kevin-rose-alex-albrecht.jpgSteve Ballmer says he's no longer interested in Yahoo (YHOO), so what's Microsoft's (MSFT) next move?

First up, obviously, is an attempt to block the deal by convincing regulators that it's uncompetitive.  Microsoft may have some traction here: when Google and Yahoo did a dry run of this deal earlier this spring, the U.S. Department of Justice looked into it--in particular a phone call from Google CEO Eric Schmidt to Yahoo CEO Jerry Yang in which Schmidt offered to help defend against Microsoft's bid for the company.  We don't see how the deal could possibly warrant government intervention--it's not the government's fault that Microsoft's Internet business has been sucking wind for 13 years--but that doesn't mean Microsoft's legal army won't be able to slow it down or scuttle it.

Beyond that, what's Ballmer's plan B? The WSJ says Wall Street is expecting a full lay-out of Microsoft's post-Yahoo strategy at its annual meeting of financial analysts July 24. Among the rumored options:

  • A deal with another non-player in Internet search like Ask.com
  • Buy social news site Digg (Microsoft already serves Digg's ads), which could lead to another battle with Google.
  • An acquisition of Facebook (which also has an ad deal with Microsoft), as a platform for an operating system for the Web

All predictable speculation--none of which will matter.  Facebook isn't going to sell to Microsoft unless Microsoft offers it an absolute king's ransom ($20 billion +, in our opinion).  A Digg acquisition wouldn't move the needle. An Ask acquisition wouldn't change anything, either: It would only increase Microsoft's share of the US search market from 9% to 14%. Big whoop.

Back to the drawing board...

See Also: Former Fed Regulator: Yahoo-Google Search Deal To Face "Serious Antitrust Scrutiny"
All Right, Yahoo Bashers, Put a Sock In It: This Is a Good Deal
Yahoo Cost Freeze Means Business Likely Weak--Microsoft Just Waiting To Buy Carcass?



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20 Comments

Digg seems the likely choice and a good move for microsoft

watch out


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Bjorn Tipling (URL) said:
Oh please no don't buy us. Barry would never let that happen, unless he would make a lot of money. :(

Neek said:
MS can try to buy every single Web destination, and still not have much to show for it.

Remember how Yahoo had actually done this well with a good number of great purchases (del.icio.us, Flickr, etc. etc.) and its own properties, but in the end, it means diddley squat since the sun is shining on Google.

Unless MS makes great strides in search and/or advertising, no amount of content/destination plays would really matter.

They can buy the best real estate and in the form of those properties (Ask.com, digg.com, Facebook, etc.) and be akin to having the best kinds of tanks and military hardware; but since Google has thermonuclear weapons when it comes to Internet plays, it won't matter much.

I think Microsoft's next move will be to position itself as the platform for display advertising. This could mean that they could go after Doubleclick's client base, by giving away display ad serving for free, in exchange for those sites giving Microsoft their unsold inventory to be used as part of Microsoft's Ad Network

msnbuysaol said:
They might also go after AOL. TW is more than willing to part ways with AOL, and thus will dump it off at a easy price.

hehateme said:
microsoft should stop focusing on the consumer end of the web. the backend or enterprise web is where the path is for them! oracle,sap,salesforce,netease,ibm,etc. are in a position to make a killing!!!

Jack said:
Microsoft buy Digg now. Wait for Yahoo......to crumble a bit more down the line........then try to make another dealio.

http://onlinemarketingjuice.blogspot.com

hmmm said:
let me reiterate what I said over a month ago

http://www.alleyinsider.com/2008/5/microsoft_buying_facebook_not_as_silly_as_you_think

hmmm said:
May. 08, 8:47 AM
As stated earlier


hmmm said:
May. 06, 7:36 AM
The real interesting investigative blogging would be around looking for what MSFT is gonna spend that $50B that is burning a hole in their pocket.

I get the feeling that we could see one of the most aggressive rollups of internet properties in history.

Linkedin, Digg, Facebook (not to sure about this one) the usual suspects and the not so usual suspects, tivo, webmd, etc

The VC's are going banannas I am sure and thinking about how to position their portfolio co's as worthy of a piece of that $50B

Upside is that MSFT could buy a lot with that kind of cash, the downside is that it may require more integration and resources as none of the properties (speaking particularly about the startups, not tivo, webmd, etc) could stand on their own and allow for a slow transition.

That is why tools like digg and linkedin make sense, but more dynamic sites like facebook, etc, not so much. If a site relies on employee creativity and dynamic founders/employee input (as in if they leave company can easily lose its way), it usually wont work, but plug and play tools can do fine

Just as much of a problem is that the founders and employees of startups 1) tend to have "startups" in their DNA so the likelihood that they would be in for the long haul as a "Softie" is minimal 2) MSFT would have just given the emps enough through the acquisition $$ to be able to bail after the acquisition and still have financial security as opposed to a mature buyout where the most of the employees are still slaves to the clock

thoughts

I will add to this the possibility that MSFT could by Facebook for $15b and then Yahoo for $30-$35b those getting both companies for $50b (what yahoo wanted in the first place)

If social networks end up being crap, and if MSFT can get Google to overspend on a facebook because Goog cant buy Yahoo and doesnt want FB with MSFT(which could be a strategy), they can start to kill 2 birds with one stone. Remember, MSFT has the $40b in the bank and generates more cash in one quarter than goog does is a year. MSFT can afford to screw up, goog cant.

I am beginning to think that MSFT strategy to take down goog is not totally a head on assault.

IMHO MSFT has
1) brought goog under the microscope of the FTC
2) tried to buy goog competitor (forcing goog to expose itself as "evil" further, with this $1b joke)
3) now that goog is in a tizzy and schmidt is starting to have flashbacks of Novell (what happens when you wake the Redmond giant) MSFT takes aim at something Goog prob wants and can legally buy in an effort to rope them into overspending
4) then go buy Yahoo for $35b (and others with the $15b saved) when goog has hands full and a taste of reality

more thoughts on this chess game to come

Anyone else have thoughts

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