Yahoo is struggling to be like Google and works to support various open source projects, including PHP, FreeBSD, YUI, Squid, and Linux. It serves as an alternative to Microsoft products in a variety of its businesses; for example, Yahoo recently acquired Zimbra, an open source alternative to Microsoft’s Exchange Server and Outlook client email software.
Microsoft loathes open source in general and Linux, PHP, Zimbra, and other Windows-eroding products in particular. Microsoft intends to promulgate its Silverlight, .Net, and other proprietary solutions on the web, none of which would ad value to Yahoo’s existing properties, and would instead tend to cause mass defections.
Brain Drain. Microsoft’s absorption of Yahoo would destroy huge amounts of synergy-resistant products and services. Who would benefit from this? Google. Microsoft’s purchase of Yahoo would either intentionally result in the dismissal of brilliant open source engineers who would likely take their knowledge directly to Google, or simply send out cultural ripples that would prompt employees to leave voluntarily.
Microsoft is already suffering a tremendous brain drain as Google hires away all the smart people. Even Google is worrying that it can’t find enough qualified people to hire. Should Microsoft pay incredible billions for Yahoo, bust it up, and send its talented brains to its greatest rival?
Fleeing Customers. In addition to lost employees, Microsoft would also likely trample to death Yahoo’s remaining products by innovating new Windows-centric ties, sending the very audience Microsoft is hoping to buy in other directions. Flickr users would likely be tempted to move to Google’s Picassa, Yahoo IM users to GoogleTalk, Yahoo Mail users to GMail, and anyone who still uses Yahoo search might likely defect to using Google as well.
Anyone who wants to use Microsoft’s search and online technologies likely already are because that’s the default choice for most users. The majority of Windows users are choosing to not use Windows search services and instead use Google, and no expansion of search services tied to Windows will change that, particularly if it comes directly from Yahoo, another site people are intentionally choosing not to use.
Fleeing Partners. In addition to an exodus of customers–many who aren’t even paying to use Yahoo’s services–a hostile takeover of Yahoo by Microsoft would also have a chilling effect on Yahoo’s current partnerships with open source projects and its increasing integrations with partners such as Apple. While Google and Apple have established themselves in tight partnerships, Apple has also gone out of its way to develop a relationship with Yahoo.
Why? While Apple and Google cooperate, they also compete in some areas, or simply work at cross purposes. Google directly supports FireFox while Apple maintains its own KHTML-based Safari browser (which also integrates with Google search); Apple offers its own fledgling .Mac services that compete to some extent with Google’s; Apple has its own smartphone strategy that stands distinct from Google’s Android. The two companies have independent ideas about the future of productivity software. These don’t make Apple and Google enemies, but they do create reasons for Apple to develop parallel partnerships with other companies in the search engine space.
Apple’s stock Widget in Mac OS X and the identical Stocks applet on the iPhone are both connected to Yahoo Finance rather than Google’s similar service. Search features on the iPhone can also be run through Yahoo as an option to Google, and the Weather applet is also based on Yahoo’s data. Apple also promoted Yahoo as its partner in offering push email on the iPhone.
While Apple also forms partnerships with Microsoft in promoting Office for Mac and in building interoperability with Microsoft’s proprietary OOXML file formats and its Active Directory and Exchange Server, Apple would likely be hesitant to build online partnerships with the company that expressly worked to destroy the Macintosh after having cloned it, pointedly tried to kill QuickTime and OpenGL and every open file format, openly dismissed the iPhone as an expensive joke, and has a long standing grudge against open, interoperable technologies of any kind. Other Yahoo partners have similar reasons to abandon the company were it to be acquired by Microsoft.
