Stanton Champion

I haven’t written anything about the Yahoo!/Microsoft deal yet, but this post on TechCrunch sums up some of the problems nicely.

In short, Yahoo! still has some very popular properties, and this is one of the reasons Microsoft feels like the two companies are a match. They can place ads on Yahoo!’s popular sites. Yet the question remains: can Microsoft retain the profitability of these properties given a very ugly and difficult merger? Internet companies are driven by the talent of their people, and without the right leaders providing vision for product, design, or engineering, Internet products can get really stagnant really fast. There’s some stickiness to some of Yahoo!’s products, like Flickr and mail, but customers will switch if they think their platform is dead or dying.

If this gets ugly, both Microsoft and Yahoo! will have a hard time retaining talent. That’s good for competitors, but bad for this deal and the shareholders of both companies. Ultimately, the lesson here is that hostile takeovers of Internet companies are really, really hard because the valuable assets are mostly intellectual and talent related. Microsoft may prove this wrong, but somehow I doubt it.

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» Tagged: internet, merger, microsoft, yahoo

» Filed under: Business, Technology