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February 11, 2008 7:57 PM

Yahoo Squeaks, Microsoft Squawks



News Commentary. They say trapped animals fight more fiercely. But what happens when two animals are cornered?

Microsoft's unsolicited—and unwanted—$44.6 billion bid backed Yahoo into a place from which there was seemingly no escape. But rather than die, Yahoo is fighting back. Earlier today, Yahoo rejected Microsoft's offer.

Microsoft feels cornered, too, but by Google. Microsoft sees no escape without Yahoo, and the company will fight fiercely to get its prey. From Microsoft's perspective, there are two losers without the merger. Yahoo must die so that Microsoft will survive.

So, it is no surprise that Microsoft is fighting back too. After U.S. stock markets closed, Microsoft issued a rather long response to Yahoo, but more to shareholders than to the board of directors. Microsoft's strategy now will be divide and conquer, to rally a mutiny among Yahoo's ranks.

The first and last paragraphs of Microsoft's four-paragraph response are chilling for their bullying.

"It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties."

Translation: You Yahoo bastards made us wait a year longer than we wanted. It's kill or be killed. Google's killing us, so we're killing you. Too long a delay, and our shareholders might revolt before yours. So, stop stalling. You're dead already.

"The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."

Translation: Sure, it's a low-ball bid, but, hey, you ran the company into the ground. You don't deal with us, we'll lead your shareholders to revolt. They were stupid not to invest in Microsoft, and now they will do so—hell, they'll beg us for the chance.

Stupid, Microsoft. Trix are for kids.

There will be two losers from any hostile takeover. Then Google will take everything else. Not that it really matters. Microsoft's bid, assuming that it is sincere, reveals that the services platform is vaporware. Sure, Microsoft has built out something, but it's not nearly enough to compete with Google. Microsoft has tacitly admitted that it's even farther behind Google than anyone suspected. Surely Google can smell that blood. Yum!

Microsoft should really start worrying about Amazon, too. Microsoft's neighbor down the street has progressed a whole lot in the last 18 months. Hell, Amazon sells services as a utility. Amazon S3, for Simple Storage Service, is leaps ahead of anything from Google, Microsoft or Yahoo. Amazon is one big, sleeping husky that has to wake up sometime. When?

Microsoft—and Google, for that matter—should start worrying about Amazon wagging that Long Tail. Maybe Microsoft executives should have asked if a Yahoo acquisition could lead to an unholy alliance between Amazon and Google. Then it would be Google sweeping that Long Tail Microsoft's way.

Back to Microsoft's bullying response: It shows that the U.S. Justice Department and the European Union's Competition Commission missed a few fangs in Microsoft's mouth. Now, this is the aggressive Microsoft everyone remembers from the 1990s, the SOB we all loved to hate before the two antitrust trials whipped the company senseless. In the fight for its life, Microsoft bares its remaining teeth.

Microsoft's Yahoo takeover is now unequivocally hostile. Today, the companies gave each other an upraised middle finger. Each has one hand still free. There's another birdie coming.

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Comments (22)

Marco :

Excellent Joe

"Now, this is the.. Joe.. everyone remembers"

Joe;

Kudos!!!!

This article is the right kind of stuff that gets me excited by grassroots journalism and one speaking his mind.

"It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties."

I like your translation of the above mentioned press release by Microsoft, there is absolutely no need for me to add to it.

However, I must insist that you watch yourself with Microsoft. If Microsoft can fruitlessly try to spend 44 billion on Yahoo, what will they do to you?

Could they plan to buy Joe out? Everyone has a price, Joe. Or more nefarious, could or would they pull a "Tony Soprano" on you?

Could this be the perfect path on your journalism career where they take you to a dark corner of the woods and make you kneel before a shallow grave as they cap you?

Or could this be where one day I come to this site and it says, "Microsoft has just acquired ZDNet publications and specifically, Microsoft Watch..."

I mean to say, if those (Microsoft Idiots) want to buy out Yahoo, ZDnet doesn't stand a chance...

ZzarkLinux :

The US Justice Department didn't just miss a few fangs, the missed the whole Godzilla. And now that I think about it, Microsoft missed the whole I-zilla, didn't it?

American business culture at it's finest.

I-Man :

Joe,
Glad to find you've discovered Microsoft's "services" are vaporware. It's the kind of thing that's been obvious for almost a year now. Microsoft says and everyone believes... until it's time to show.

If you go back through the content of your article on mashups, the reader can see very clearly how careful Microsoft is to say "integration" and NOT "interoperation".

Interoperation is collaboration and Microsoft doesn't have the goods for collaboration. Imagine that. Microsoft hires the one guy, Ozzie, who knew about collaboration in a large sense after they lost Lucovsky and Ajax to Google, then they keep him from being able to produce anything that closely resembles collaboration.

Oh, well. I guess the foul-mouthed nitwits that think they can out curse and out ridicule me (the real portuno channeling through the real I-Man) are going to have to ask Ozzie to levitate himself across the stage at MIX08 to be able to impress the industry.

Microsoft has, as we say in the south, shot their wad. It means like a shotgun muzzle wad, nitwits, although I know just what is on the tip of your collective tongues.

So, having "shot your wad" you're not much good for a while until you can load your gun up again. Now, I know there are some tantalizing analogies here and the typical losery that denigrate and pooh-pooh ideas here are salivating at the idea of being able to mouth some more obscenities. They call it "free speech". But it's going to cost a whole lot of readers a whole lot of opportunity.

So, anyway, thanks for divulging the realization that Microsoft has lost its way and has no means of delivering web services. The problem with Microsoft's technology gap is that Microsoft can "act" like they're doing something... at least, that's the way it used to be when there weren't so many bloggers and analysts and the press bowed and scraped at everything Microsoft "officials" said.

It's going to get much worse for Microsoft. They've been pretending for a very long time. And the shock of reality is going to put them and their shareholders, clients, partners and developers on their collective cans. In the south that means "ass".

I-Man :

This typical bravado of "let Yahoo rot" is quite typical of people who have no idea what they're getting into. Hostile takeovers only work if the guy in charge of the acquiring company knows the technology well enough to strongarm all acquire assets into the proper places.

Ballmer has not one clue and is depending on his legal advisors, investment advisors and Ray Ozzie, the white-headed wonder who is going to be stuck with trying to make some sense out of the two systems to see what stays and what goes.

Rot? Oh, yahoo will rot, alright. It will rot right in the middle of Microsoft's gut and poison the entire Microsoft future.

Flying chair :

Ray says it's about Notes. Doesn't everyone use Lotus Notes? What more could any sane person want from their IT masters than a PC with Notes? Once they see Notes they will forget about all those lesser needs and fall in line to serve our plan.

So it is written, so it shall be.

Listen Joe...

You've pissed the capo off wid'th dis', c'apish?

Word iz' you gotta go down fo' writting dis'. Bill, da' man Gates is puttin' a hit out on ya. I'm tellin' ya' dis', my friend, you pissed off da' wrong people!

If you hadn't already, you should pack up and head for tomorrow now. Take ya' family and go, and go now, cause I don't want to be at your funeral because of ya' mouth!

I can spot ya' a couple of g's to get outta town now. And I gotta tell ya', stop tellin' da' truth as if you're some kinna' wise guy, because everyone thinks they're a smart ass until they catch one on da' kisser!

Last time somethin' like dis' has happened, day' made it look like suicide, a wise guy was lippin' off and day' found him off a bridge somewheres with seven stab wounds to da' back before he through himself off da' bridge -- Yeah, he hated himself dat' much, if you get my drift, my friend.

Now you gotta get out of here...

I-Man :

If you follow the development of Yahoo's product called Panama you can see Yahoo pulled back a short period after VCSY was granted it's XML Enabler patent 7076521. I think Yahoo was smart enough to abide by any request by VCSY to stop any infringing activities... while Microsoft rolled right along.

It's quite telling to me VCSY only went after Microsoft and so many others have refrained from completing and publicizing their own next-gen projects. Now, with Microsoft's bid for Yahoo and articles telling how Microsoft has simply admitted their web services efforts have failed, I can't help but think Yahoo does have some form of agreement with VCSY that Microsoft would love to get their hands on.

HOWEVER, I don't think Yahoo will leave much for Microsoft to use after this hostile takeover moves very far. By the time the proxy battle gets very far I would think Yahoo will be able to spin off whatever services body they have and Microsoft will end up buying a carcass with no life.

And Microsoft's own "Live" will be long dead by then.

Microsoft needs to come to terms with Ballmer's obsessions and fears. He's obviously running from something and not toward anything... since he threw the chair in 2004 only a couple weeks before the VCSY patent he's being sued over was granted, I think his fears that seemed so far away once upon a time are soon to be realized.

Al :

Yahoo really has poor ol' MSFT over a barrel. They know MSFT is getting its lunch stolen by Google on a daily basis, so they hold out for a bigger pie.

A Google-Yahoo merger likely wouldn't pass regulatory scrutiny on anti-trust grounds, so what's left? An alliance/business arrangement/partnership. Wouldn't a google-yahoo partnership really drive up the thrown chair expense in Redmond. ;-)

of course none of this has anything to do with a bankrupt company in Texas & their seemingly over broad patent.

Ralph :

"Microsoft needs to come to terms with Ballmer's obsessions and fears. He's obviously running from something and not toward anything... since he threw the chair in 2004 only a couple weeks before the VCSY patent he's being sued over was granted, I think his fears that seemed so far away once upon a time are soon to be realized."
--------------------------------------------------

Maybe Ballmer finally realizes that this is 2008 and not 1998 when MS had a virtual lock on the computer world. This may still be a Windows world, but even that is changing daily with the growth of Linux and Apple.


And now some governments are now moving toward open source like, most recently The French Police dumping Windows in favor of Linux Ubuntu. Ten years ago that would be unheard of. Surely that might have a effect on Ballmer.

Centerfield :

Wow, there's nothing more relevant or influential than the French Police.

Isn't it funny that in this day and age, where so many people have access to the technical tools and resources to create great products and services, we are stuck with a 'top 3' of:

* Google. Powerful products, look like crap, and they are becoming evil with the amount of personal data they can track. Their old motto of "don't be evil" must have been long forgotten.

* Microsoft. Prettier products than Google, but they don't work as well. Monopolistic power.

* Yahoo. Cannot compete financially, has pretty good products, but all may be lost if acquired by MSFT.

Wonderful choices.

Sheila :

Joe - you crack me up.

'In the fight for its life, Microsoft bares its remaining teeth.'

You assume too much and get way ahead of yourself. MS isn't going anywhere and is not fighting for its life. Have you looked at the financials lately ? Sure, Google is onto the next big thing but search and advertising is only in its infancy. Don't think the Enterprise will disappear overnight. You could still be blogging / commentating / wishing for another 20 years and MS will still be a meaningful and successful company. Sure - They may have redefined some strategy by then, and look slightly different. However, once again you are letting your desires get ahead of reality. MS has so many companies locked in into its enterprise suite through the provision of integrated platforms and tools. Cash Cow. No one will dent this and it will continue to grow. Even if organizations like the french police want to go on a suicide mission and learn the hard way. A good CIO knows what TCO is. Go ahead, run everything as SAAS and own nothing on your premises / DC's. Entrust everything to 3rd parties. Deploy everything only OSS. May as well Napalm the effective businesses of the time all at once and take ourselves back a few decades. A move to SAAD is jsut not going to happen all at once and its not going to happen as quickly as you would like us believe. There will always be businesses wanting to own their own infrastructure and manage the applications that service the business and not give this mission critical piece to 3rd parties.

This deal is significant but its not the make or break for MS just yet.

Joe - tell you what. Get your 'root' password out and go entertain yourself with your unusable, piece of crap OSS. Enjoy it and think about how much sense it really means to a business that has work to do. Then come back and apply a little more thought the comment - fight for its life.

Always entertaining though.

@Centerfield

Thanks for putting the "...nothing more relevant or influential than the French Police." into perspective.

Personally, I can care less if all of France fell off the edge of this earth this morning, but that's another topic for another time.

Secondly; I use Ubuntu as I most recently stripped Microsoft Vista, XP, and W2K off my personal PCs. I also use a new Mac Pro. I am a fan of technology, always was, so I really have no ax to grind or pretending to be a sold-out shrill, or shill carrying someone else's banner or for that matter, acting like some sort of senseless religious zealot.

With less than 3% of the Computing world using some form of Linux, I still don't see the "millions" or "hundreds of thousands" scurrying over to Linux as many may claim about. Sure Vista made a few people mad, it certainly helped me to make the Ubuntu switch personally. Yes, I've sold a total of seven new machines with Ubuntu on them this year and downgraded 30 machines to XP from Vista, but I guess my point would be, the Ubuntu/Linux rage to switch from Microsoft hasn't made the national headlines at CNN news or any "real" national press coverage on NBC Nightly News -- No not yet anyways.

Hollywood is still in love with Mac, watch most any show out there and whenever you see someone using a laptop or computer, its usually a Mac, I have yet to see a Linux screenshot. Some may say that you are seeing some sort of Linux flavor hitting some of the movies, but realize these are just mainly Flash screens "programmed", most of the actors in Hollywood probably cannot even type, let alone program or develop -- It cracks me up =;o)

As far as idiots like Ballmer at others throwing chairs and such, I cannot believe that they would be throwing fits of rage over little 'ole Linux, and if they are indeed, might I suggest Prozac in large doses?

I mean what kind of power trip are these ego-centric baboons on anyway to let a lousy 3% get to them?

If so, maybe it is time Bill does step down and Ballmer is fired along with those idiots that thought of buying Yahoo in the first place. In fact, maybe I should send Ballmer an Ubuntu Installation CD to just to help him over the edge...

Just one man's thoughts...

It's going to get much worse for Microsoft. They've been pretending for a very long time. And the shock of reality is going to put them and their shareholders, clients, partners and developers on their collective cans. In the south that means "ass".

As far as idiots like Ballmer at others throwing chairs and such, I cannot believe that they would be throwing fits of rage over little 'ole Linux, and if they are indeed, might I suggest Prozac in large doses?

Jason :

What is the whole Yahoo takeover about? They need another story besides the OS upgrade business model. There's a greater sense of urgency to get to critical mass in Web Services because of the problems around Vista.

I will go out on a limb here and make a prediction. Microsoft is going to pull a "New Coke" with Windows Vista, and move XP back front and center sometime in the next few months. Looking at their website, it seems like they are tiptoeing in this direction. I have not seen this much external pressure on the company to change course since the late 1990's, when they were trying to hang onto Win32 and COM and the world was moving to managed code. They eventually got that one right...let's hope they get this one right as well, because it's too depressing to go to Best Buy these days and look at all of those Vista Machines.

tb :

@Jason


For a test I entered "microsoft windows" into Google and hit "I'm feeling lucky". It does not take you to Windows Vista, just Microsoft.com. Also, MS has made some Vista-type things available for XP. IE7, Windows Defender, Windows Live gives you an email app and photo viewing/editing app similar to Vista.


Let's see if MS extends XP installs on new computers. THAT would be interesting. And how will they market it without looking like an admission of Vista failure? How about, "Due to overwhelming interest/demand, MS has announced a new Windows division: Windows Classic." Of course they would keep Vista going, because the bad press of pulling it would devastate them. Another marketing idea I just thought of: 2 divisions: Windows Advanced and Windows Classic.

Manan :

its no more a simple take over its now an issue of egos MS will get yahoo no matter how many anti-trust complaints u file i guess MS is now used to them and knows how to deal with them; mittal took over arcelor; tata took over corus; manchester united was taken over this deal will go through 1 way or another

this was in the amking ever since yahoo messenger and msn shook hands

Long Justice :

I-Man,

Not sure if you noticed this - the Wade-YHOO connection is really interesting. I had to rub my eyes when I saw it. 6521 is bothering MSFT more than they are letting on!

Rob Poole :

Just wanted to say... Joe, this article is awesome. Best one I've seen you write in weeks.

After reading those salient quotes from Microsoft, I, too, feel as though I'm watching some kind of mafia crime drama unfold!

oyun :

Thanks, this information it was very useful to me.

It's going to get much worse for Microsoft. They've been pretending for a very long time. And the shock of reality is going to put them and their shareholders, clients, partners and developers on their collective cans. In the south that means "ass".

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