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Yahoo Inc. is considering buying a stake in America Online Inc., joining other Internet powerhouses interested in the company's Web portal, a person close to the talks said Friday.
Boy, you have to get up pretty early (as in, never sleep), to get a scoop around here.
Here's a bit of speculation:
The whole dang bidding war isn't about content, it's about VOIP.
With Yahoo and MSN already announcing a deal to link their messenger services, they present a powerful unified front to take on AIM, the dominant IM service, in the upcoming VOIP war (and yes, a VOIP war is definitely on the way).
If either Yahoo or MSN get AOL, the unholy Yahoo/MSN instant messaging merger will mean that between the two, they'll have effectively wrapped up the IM market, and Google won't have a hope in heck of putting all that dark fibre they're buying to good VOIP use.
If Google ends up with AOL, then we'll have a real horse race for the VOIP market.
Yahoo pretty much has to take a swing at AOL because if they don't, and MSN gets it, then they'll be a decidedly junior partner in the IM merger, and probably get a teeny-weenie slice of any VOIP revenue.
MSN can't let Yahoo get AOL for the same reason.
And Google/Comcast absolutely HAS to get AOL as a matter of survival.
I've been following this for a while here (through the news and through reading the posts in here), and I hate to say it, but I think everyone's looking in the wrong direction (myself included) when we look at content as the motivator behind the buyout offers.
There are lots of places to get content out there. But there's only one place to get the market leader in instant messaging.
The primary motivation for Yahoo is speculated as keeping the portal out of Google's hands. Aside from it's not in Yahoos interest for MSN to own a minority stake in AOL, perhaps Yahoo is also not confident that MSN is able to consummate a deal with AOL and keep it out of Google's hands. Which makes it all the more urgent to step in.
MSN has been negotiating this for awhile and haven't been able to score a home run, much less get to first base. Looks like it's up to Yahoo to clinch this deal.
I can't wait to see what Google's next move is, and how this might be a turning point in Google's self-image, if not it's public image. This could very well be the big fight where Google begins to throw off the image of nerdy cleverness to reveal it has corporate muscle and the teeth that go with winning a scrap.
Yahoo has the muscle and finesse to handle this, so it's interesting to see how this showdown plays out.
People are creatures of habit. Y, G, Comcast, AOL are all working to achieve the best scale as possible. Bigger is better.
You have to keep in mind this is not just an online business model. Same thing is happening in selling paint, cars, office supplies, computers--even churches are getting into scaling.
This is odd to many of us, because the web was suppose to be about empowering millions of individual voices. But, as it turns out, we're all pretty similar.
TWX shareholders already experienced a similar debacle when they took on the AOL merger. Cash will speak here.
the deal would not be valued at $5 billion if Microsoft and Yahoo offer $7-$8 billion for it. Welcome to bidding. Plus, who can sweeten the pot more with other concessions?
I'd say Microsoft can give TW a break on something else to win the deal. Microsoft is everywhere, from desktops to cable top boxes, PDAs, and soon cars. All that said, this will be interesting to watch, because you never know. I think Microsoft can pay more in cash, and will give AOL a better deal on ad % (since it really wants the deal to screw Google), and MSFT can use it's leverage on other fields. Microsoft could easily take a few billions loss here, to gain share and stick it to Google.
If I was Parsons, with other things being equal or close to, I'd choose Microsoft (after the reading the fine text agreement of course ;)) and squeeze something else out of them. They have the cash, and Microsoft will definitely be here 10 years from now.
Any way you play this, Yahoo! must acquire that stake - hence the fact that they are now in the running.
1. Google Payments (Expected to launch soon), competes with Paypal.
2. Froogle - competes with Shopping.com
3. Google VOIP would compete with Skype
4. Google is eBay's #1 source of new customers (both via affiliates and natural search), if Google setup Google Auctions - the whole thing could start falling apart at the seams for eBay.
I would not expect to see Google Auctions. Consider the precedent of Yahoo Auctions, which has been around for years yet has never been able to escape from eBay's shadow.
The truth is Google is fairly weak without the search network and the content network. MSN needs those search partners to usurp Google's power. AOL is the logical starting point. Grab AOL and you also get Netscape's dial portal. That's 10% of the traffic right there swinging MSN's way. I bet they don't stop at AOL. They will keep knocking off one partner after another. By the time the MSN version of awords is ready, I think they will be on equal footing and MSN has way more than 7 billion in the warchest. 3 years from now, we could be saying Google who? just like Netscape who?