The key for Microsoft and Yahoo

microsoft-yahoo It’s anyone’s guess at the moment whether Microsoft will succeed in its bid to acquire Yahoo.

Following Yahoo’s rejection of the unsolicited bid, subsequent speculation on who else might emerge as a white knight, or even whether Yahoo and Google might get into bed together to keep Microsoft at bay, the scene appears to be set for a battle that, whatever the eventual outcome, will re-draw the competition map of the internet.

I wrote earlier about the complexities in combining Microsoft and Yahoo, pointing to the many different business and organizational issues that are constituent elements of this would-be marriage.

How to blend the two organizations’ very different cultures – organizationally and nationally – is a question that I think will become the most significant one to answer, especially if the bid eventually succeeds in the face of Yahoo hostility to it.

Yet culture is not only about organization and nationalities, especially in this case.

Today’s New York Times has an added dimension to this matter of culture, concerning technology:

[…] Merging corporate cultures is generally a major undertaking in any acquisition. What would set this integration apart, though, is where the culture clash is likely to occur – in the two companies’ basic philosophies on technology.

[…] Microsoft and Yahoo have drastically opposite philosophies on open-source software. While Microsoft has used some open-source code, it has generally not contributed technology to the open-source community. In contrast, Yahoo has been an extensive contributor and has built its internal computing platform almost entirely from open source.

In essence, the paper says Microsoft and Yahoo are like apples and oranges when it comes to technology.

Yahoo is to open source and Microsoft is to proprietary. That’s how I’d see it.

Could that be a hurdle too many, never mind all the other issues out there including attention from regulators and even concerns in China?

My question is this: won’t it really depend on the employees in each company and their willingness or otherwise to embrace change?

The NY Times’ article includes this very interesting view from an anonymous Yahoo employee:

[…] Inside Yahoo there are roughly three camps of employees, in terms of attitudes about the takeover, he said. One group, which he estimated was 5 percent to 10 percent of the employees, would not work for Microsoft under any circumstances.

A second group, he said, was taking a wait-and-see attitude and generally thought, “I wouldn’t apply to work at Microsoft, but I won’t resist.” The final group believes that Microsoft could significantly aid Yahoo with access to well-financed research labs, a higher stock price and the willingness to invest over longer time periods.

His own attitude is one of wait and see. “It depends on what they are willing to agree to in terms of not interfering,” he said.

And perhaps the most telling quote of all:

Ellen Siminoff, a former Yahoo executive who is now chairwoman of a search engine marketing firm called Efficient Frontier, said she believed that Yahoo employees would be more likely to stay and embrace the takeover if it were blessed by Yahoo’s well-loved founders: Jerry Yang, the chief executive, and David Filo, who is one of the company’s key technologists.

“If I were Microsoft and I could find a way to get Jerry and Filo to be supportive, that would make a big difference.”

I concluded my earlier post by saying whatever happens, this will be one heck of an exciting time for the communicators in both companies.

That’s also the conclusion here.

Neville Hobson

Social Strategist, Communicator, Writer, and Podcaster with a curiosity for tech and how people use it. Believer in an Internet for everyone. Early adopter (and leaver) and experimenter with social media. Occasional test pilot of shiny new objects. Avid tea drinker.

  1. Shel Holtz

    No matter how sound the business strategy, Cisco will not proceed with an acquisition if the cultures don’t match. Conflicting cultures are the biggest reason mergers fail. Of course, what would happen in the MicroHoo deal isn’t a merger. It’s an absorption of Yahoo properties into the Microsoft fold. So, who knows?

  2. neville

    You mean Microsoft not Cisco?

    Agree with your point. Pressure on Microsoft therefore in winning Yahoo employees’ commitment. Or enough of them, at least.

    Just a few more things they need to win.

  3. Eamon

    People are used to big mergers between traditional companies such as banks, utility, manufacturers and so on, but not between two companies connected to the internet in the way, Microsoft, and in particular, Yahoo are.

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