February 4, 2008 – (HOSTSEARCH.COM) – The Board of Directors of Yahoo! will evaluate an unsolicited proposal recently submitted by Microsoft outlining its possible purchase of the Sunnyvale, California-based company. Despite being what some call an ‘Internet legend’ and the ‘iconic’ Internet company, Yahoo!’s performance has been below par over the last years and the company recently announced plans to layoff around 1,000 employees.
Although news of a possible merger has boosted stocks as far away as Tokyo, the proposed $44.6 billion takeover bid is opposed by Google, who sees the merger as potentially allowing Microsoft to gain control of the Internet – something that would of course ultimately undermine its own dominance.
“Microsoft's hostile bid for Yahoo! raises troubling questions," Associated Press reported Google's chief legal officer, Mr. David Drummond, as saying. "This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation."
A number of reports have suggested direct discussions between the top executives of both Google and Yahoo! with only one topic of conversation – how Google can help Yahoo! fend off Microsoft. A number of reports have suggested discussions may have even looked into the possibility of Google and Yahoo! forming a permanent partnership.
Although US politicians will meet February 8, 2008 to discuss Microsoft's move, most analysts believe the company will receive regulatory approval in the US. The situation in Europe is less straightforward. Microsoft and the European Union have locked horns on several occasions, and in 2004 the company was fined 497 million euros by the European Commission (EC) for unfair competition practices. Since then Microsoft has been subject to two further EC investigations.
Google’s approach to Yahoo! is the biggest current Internet story and will send shockwaves around the world, but its impact on the web hosting industry is less clear. Whereas Google has a number of initiatives such as Google Base, Google Apps, and Google Pages, it does not have defined web hosting activity per se. Yahoo! on the other hand, certainly does, and Microsoft is active providing both end user hosting options and web hosting software solutions such as the soon to be released Windows Server 2008.
The prospect of Yahoo! and Microsoft combining resources and focusing on web hosting as a business activity could potentially create a mega-host and a situation where web hosting is as much a commodity as Pepsi or Coca-cola, save for a few specialist hosting areas. Only time will tell, but with probably the biggest IT sector merger ever very likely to take place, we will know sooner than later.
