THE BLOG

Microsoft: Hallucinating...Or About to Buy Yahoo?

11/16/2007 11:43 am 11:43:05 | Updated May 25, 2011

I'm going to go out on a limb here and assume that Microsoft division president Kevin Johnson is not a moron. I'm also going to assume that, when Johnson said yesterday that Microsoft plans to grow its Internet search share from 10 percent to 30 percent and its online advertising share from six percent, he could not possibly be imagining that Microsoft could do this on its own.

(Microsoft has been trying to succeed online for 12 years, and it's no closer now than it was when it started in 1995. Its Internet division is losing almost $1 billion a year. How does this compare to other Internet giants? Terribly. Even pummeled AOL is still printing money.)

So how could Microsoft actually achieve the goals Kevin Johnson laid out? There's only one answer: Buy Yahoo.

Buying Yahoo would give Microsoft 30 percent search share instantly. It would also boost Microsoft's ad share close to that 40 percent goal.

A Microsoft acquisition of Yahoo would be disastrous for Yahoo, which is having enough trouble competing with Google on its own (imagine what would happen if it got swallowed by the Redmond whale. In six months, all the remaining strong people would be gone).

But what such an acquisition would do to Yahoo is irrelevant. If Microsoft comes in with a Murdoch-like offer, Yahoo won't be able to refuse.