Resistance Is Futile: Is the Merger Innovation or Assimilation? (Part 1 / 3)

Michelle Stone - March 13, 2008

With Microsoft’s unsolicited bid to purchase Yahoo, how would such a merger affect the Internet, especially where search technology is concerned?

By now, everyone — even those who aren’t addicted to the news or the Internet — has heard of Microsoft’s unsolicited bid to purchase Yahoo for a proposed $44.6 billion dollars. We’ve even touched on the subject in an earlier post. As the merger appears to be more and more likely, what exactly does the deal mean for US? How will it affect the way we use the Internet the day after the merger’s done? Or how we use it a month after? Two months after?

Before we start worrying about how we will research a new topic or how our favorite websites will fare, keep in mind that even if Yahoo runs out of options things won’t change overnight. Say that Microsoft finally succeeds in purchasing Yahoo. Given the scope of the buyout, there will be an anti-trust review in the United States. Once that has been completed, there will be another anti-trust review, one that is much lengthier and under the jurisdiction of the European Union. Should the buyout pass those two anti-trust rounds, there is the larger issue of assimilating Yahoo into the larger Microsoft whole. And that will take time.

Assimilation of Yahoo presents cultural and technological problems for Microsoft to overcome. Many of their products and technologies overlap and Microsoft will have to decide which will be combined or which will be eliminated. That in itself is a lengthy process, particularly in terms of combining products and technologies. Additionally, there are cultural concerns. Yahoo has long modeled itself as a fun-loving online company with an open-source technological model. Microsoft’s culture is more corporate and focuses on proprietary software. When the two cultures collide, there will be casualties.

Which leads us back to…how will this affect our Internet? The one we know today?

In the short term, the merger won’t have an impact outside of share prices and continued speculation in the blogosphere. The approval and assimilation processes alone should take years to complete. Add to that the fact that Google has voiced concerns regarding innovation on the Internet and has even taken the step of forming a lobbying campaign to block a Microsoft — Yahoo merger.

So, what of innovation? How different will the Internet be after such a historic union? How much will things really change once all is said and done? Stay tuned. In the next installment, we’ll take a closer look at the advancements made by Microsoft, Yahoo, and Google to see if we can determine how our use of the Internet might change post-merger.