My sources say that the Yahoo and Microsoft teams are bunkered down in a Palo Alto hotel hammering out the final stages of a transaction that will have Microsoft picking up the Yahoo search business. Word is that this deal will be done this week. While this is not surprising, it does bring to question the motives and plans of Microsoft.
Why would such a complicated transaction (just Yahoo search with all the headaches and all) be in the cards for Microsoft? After the failed bid for $40 plus billion for all of Yahoo, Microsoft’s intentions are clear. Buy the search business from Yahoo and take that team and go spend at least 20 billion for Facebook. Integrating the search team at Yahoo with Facebook puts a formidable army to take on Google.
What a move this makes. Yahoo gets everyone off their back, Microsoft gets a credible position in search, and buys Facebook to compete with Google. The price about $45 billion.
This is going to be good.
Update: here is a post from Kara Swisher – Microsoft’s Kevin Johnson’s “We Can Compete” memo – Microsoft needs Facebook and Facebook needs Microsoft.
Update 2: Robert Scoble (my former employee 🙂 ) is taking my report of Microsoft buying Facebook conversation to the next level. This will be developing further but in the meantime the jockeying is going on. This explains the recent moves at many levels… take the employees of Google leaving to join Facebook.. Facebooks posture toward Google, and the general platform behavior lately of Facebook. Maybe they knew that they were pulling a Netscape last week – knowing that Microsoft guns for hostages were coming into town.
Update 3: This is why I love this guy Umair.. Leading minds see the strategy…good post Umair.