The timing of Microsoft's $45 billion bid for Yahoo! may have as much to do with the impending departure of the Microsoft-friendly Bush administration as it does with the software giant's strategic plans.
Given the antitrust agencies' easy approval of Google's Doubleclick acquisition, it appears that "flat Web" thinking has taken hold in Washington. This is the notion that there are no barriers to entry or growth of Web-based companies, simply because of the Web's open architecture and massive scale. But if that is so, why hasn't Microsoft been able simply to grow its own Web presence to the size it desires? It's certainly not for lack of trying.
It's hard to see any merger-specific synergies resulting from this transaction. This is plainly a grab for Internet traffic so that Microsoft can continue to defend its Windows/Office monopoly against nascent Web-based alternatives. Technologically speaking, there are no new products or services Microsoft can offer to the 27% of Web users visiting Yahoo.com every day that it couldn't already have delivered to the 18% who visit MSN.com.
Even so, Yahoo's stock price indicates that Wall Street is pretty sure this deal is going to go through, and I have to agree. Our current breed of antitrust enforcers, who have already decided that the Web is flat and that media concentration is no longer possible, will define a broad market and assign tiny market shares to MSN and Yahoo. Meanwhile, the Microsoft-free world just got a whole lot smaller today.
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