By John Siracusa | Published: February 03, 2008 – 10:33AM CT
On to Microsoft and Yahoo. The conventional wisdom is that this will be bad for Yahoo—that Microsoft will make Yahoo worse. Smart employees will leave. Existing technologies will be replaced with Microsoft equivalents at great cost and little or no gain. The corporate culture will suffer, making it difficult to hire good people. And everyone will be distracted for years by internal restructuring.
This is just a special case of the more general belief that any company purchased by Microsoft will be hurt by the new ownership. That, in turn, may seem like an example of the even more broad belief that things are lost when any big corporation swallows up a smaller one, but it’s much worse than that. Yes, people are always wary of Big Corporate Ownership, but there are equally common expectations for improvement (big as corporation savior instead of villain). None of those expectations seem to exist for any acquisition that involves Microsoft.
And that brings us to the dilemma. Does Microsoft really believe that a combined Microsoft and Yahoo is greater than the sum of its parts? Does it believe that it can improve Yahoo by sharing its technology and setting a new strategic direction? This is the “true believer” case.
The other side of the coin, “the savvy huckster” scenario, says that Microsoft’s acquisition of Yahoo is simply a means to eliminate it as a competitor. Microsoft will pillage Yahoo, taking as many of its customers and high-traffic properties as possible, and selling off anything it doesn’t need. Yahoo is just another refueling stop on Microsoft’s path to do battle with Google.
So, which is worse? Is it more depressing to think that Microsoft, seemingly alone among industry observers, truly believes that there’s some legitimate “synergy” (ugh) here, or that it is consciously leveraging its bank account to crush a competitor? In one case, Microsoft looks hopelessly out of touch, or perhaps just so desperate that denial has set in. The other evokes the “evil” Microsoft from the bad-old days of the 1990s.
If I were Microsoft, I’d rather be thought of as an evil genius than a deluded geezer. From what I’ve read, opinions seem pretty evenly split. The most concise and poetic summary of the “true believer” case comes from Andy Baio (linked by John Gruber) who said this about the potential deal: “It’s like tying the Titanic to the iceberg. It’ll keep you from sinking just long enough to freeze to death.”
The analogy betrays the common belief that both companies are not looking so hot these days, with Yahoo sinking fast and Microsoft merely melting slowly (held afloat, for now, by the mountain of cold Windows and Office cash hidden below the surface). But that inevitably leads to the conclusion that Microsoft can’t possibly really believe that it can cure what ails Yahoo. Yahoo may be floundering, but its products and services in the web space have a track record that’s a hell of a lot better than Microsoft’s. And so we’re back to “Microsoft as nefarious mastermind” again.
Fake Fake Steve Jobs (that is, Daniel Lyons writing for his Fake Steve Jobs blog, but sounding a lot more like Daniel Lyons than Fake Steve) starts off solidly in the “consciously evil” camp. Commenting on Ballmer’s state of mind regarding the deal, he writes, “But here’s the really dark part of all this. He knows it won’t work.”
But then Lyons throws one of Ballmer’s own analogies back at him: “It’s like taking the two guys who finished second and third in a 100-yard dash and tying their legs together and asking for a rematch, believing that now they’ll run faster.” In the end, he ends up irresistibly attracted to the idea of a sad, desperate, Microsoft.
And round and round we go. Can it really be a little of both? Can a corporation as a whole be so bipolar, on the one hand believing its own press releases, while on the other hand cooly executing what it believes to be the most expedient plan to dispatch an enemy, despite the possibly enormous cost to itself? Can Microsoft really be of two minds on a single deal?
Sure, why not? Individual people are full of such contradictions, and collections of people are further encumbered by groupthink and other ills. But either way, the rah-rah public posturing by Microsoft about the deal certainly leaves a bad taste in the mouth.
Perhaps the saddest thing about of the whole situation is that Yahoo, for all its problems, is just one good CEO and a few years away from a reemergence as the strongest real competitor to Google. A takeover by anyone—but especially Microsoft—makes the hopes of such a recovery quite dim. And Microsoft, for its part, just can’t seem to catch a break lately. Its recent investment in Facebook was an early sign of desperation—another move that everyone else in the industry saw as ill-considered, if not downright comical in terms of the numbers.
Business analysts, especially those not deeply involved in the technology sector, view all of this as a natural, necessary phenomenon: consolidation in a maturing industry. But that’s cold comfort for the poor souls stuck in limbo as these two giants collide. And pity the rest of the industry that must deal with the unruly evil of a wildly flailing Microsoft with deep pockets and a damaged psyche. Yep, if this deal goes through, it’s hard to escape the thought that it’ll spell one thing for everyone involved: …well, you know.
1. A cynical person might think I just made that up. ↩