Yahoo now has deals with competitors Microsoft and Google redefining “keep your enemies close”. Below is a chart showing the deals side by side.
| Feature | Microsoft | |
| Stock Purchase | Google might have shown Yahoo investors love by a purchase, but that might also have triggered more anti-trust issues | Would have purchased $8 billion worth at $35 per share, probably producing a short-term spike in value |
| Search Assets |
Yahoo maintains own paid & organic search services | $1 billion to acquire paid and organic search. Yahoo would have been out as a search player. Right now, it’s second place with Microsoft third and yet to gain on Yahoo |
| Paid Search | Google powers some; Yahoo maintains its own service and can partner with others. Smart move if Yahoo believes it really does have long-term future in search | Microsoft powers all, presumably from blending Yahoo & Microsoft systems |
| Organic Search | Yahoo powers all | Microsoft powers all, presumably from blending Yahoo & Microsoft technology |
| Contextual Ads | Google powers some | Appears Yahoo would have continued keeping this; Microsoft itself doesn’t have a substantial program |
| Domain / Direct Navigation Ads | Yahoo appears to continue selling its own ads in this very lucrative space | Uncertain if Microsoft would have taken this over |
| Market | US & Canada & non-exclusive. This is important — Yahoo could still partner with Microsoft elsewhere. Moreover, those valuing a Yahoo-Microsoft deal to Yahoo-Google should remember that Yahoo effectively has “more to sell” | Worldwide |
| Term | 4 years initially; 3 year renewals optionally for total of 10 years | At least 3 years |
| Guarantees | Yahoo guarantees Google can serve $83 million in ads each quarter on Yahoo or can walk out in first 10 months — call it about $100 million overall; Yahoo doesn’t have to send any set number of queries to Google; Yahoo amazingly has no public revenue guarantees from Google | In company memo, Microsoft said it would have guaranteed Yahoo would earn more than it currently makes, for 3 years. |
| Poison Pill | Yahoo has to pay $250 million if there’s a “change of control” that terminates the agreement in first two years; more restricted terms applied to what “control” means if Microsoft gains Yahoo shares | If Microsoft did take over Yahoo, after 10 months, it could continue the agreement with no guarantees to Google and still avoid poison pill payment |
| Financial Upside | According to Google & Yahoo, $250-$450 million per year in extra income — up to $800 million annually; Microsoft & Yahoo could still partner outside US | According to Microsoft, $1 billion per year in income above current levels |
| Other Upside |
Yahoo maintains control of a powerful search brand, can partner outside US; Yahoo & Google IM services to talk to each other | Yahoo would have no need to maintain engineering staff, infrastructure and protect against brain drain |
| Downside | Anti-trust issues might not allow (but Microsoft-Yahoo had issues, too) | Microsoft would compete with Yahoo in display area yet Microsoft has strongly suggested search+display is a winning combination - so Yahoo would lose a key component other than “data” that would be given to them; search was main value (to me) of earlier deal at $40 billion, now only worth $9 billion? |
| Anti-Trust | Yahoo & Google think it’s not an issue; already had earlier test cleared by will wait 3 1/2 months for US Justice Department review | Yahoo & Microsoft might have had issues in email & other portal services; Microsoft expected to fight Yahoo-Google |
| Challenges | Yahoo brain drain; who’s still running stuff? |
Microsoft stays stalled in search; brains from Yahoo feel like they’re still going to Google |
- BusinessWeek also commented on the news