Microsoft Makes Move to Purchase Search Engine Giant Yahoo

Microsoft has announced an offer to buy Yahoo for an unprecedented 44 billion dollars. The announcement this morning sent the Dow jumping as shares of Yahoo and Microsoft both climbed amid much speculation as to what this means for the two companies.

Microsoft has found itself in tough competition with Google and is trying to position itself to not only be the leader in Operating Systems, but sees a much larger market growing from Internet technologies. It seems that Microsoft had missed the boat on mobile devices and most of the manufacturers opted to use the Linux Operating System because it is free and is not a resource hoarding OS.

Microsoft and Yahoo share similar technologies and offer the same features. Microsoft has its own search engine known as "Livesearch," which it invested a lot of money in redesign and working in new code. Now while Yahoo offers communication software known as "Yahoo Instant Messenger," Microsoft has its own as well, and strangely enough it is known as "Instant Messenger."

Therefore, we have to wonder what resources Yahoo can offer as a benefit to the Microsoft Corporation. Quite simply, Yahoo offers Microsoft a name and a user base. In the world of search engines, the amount of people that use your services determines your worth. Remember, search engines are free to the user and all of the money generated by the company is done through advertising.

On the Internet, traffic is king and if you can get the people to visit your site, or use your services, you will inevitably have companies that want to advertise with you. Now, Yahoo has a large user base and couple that together with the Microsoft name, recognition, and software and you have a much larger customer base that is capable of competing with Google.

However, there is an issue that concerns many in the Internet technology world and that is Microsoft's ability to make the Yahoo search engine proprietary in nature. Much like in the early nineties when Microsoft incorporated its browser, "Internet Explorer" into it Operating System, it would be a simple matter of adding the Yahoo features to the Windows Operating System.

Already Microsoft has done this with their Microsoft Passport system, which allows a user to automatically sign in to their services through the Operating System. Personally, I find this to be a very nice enhancement and it only serves to make my experience a little better. However, if you are in competition with Microsoft for any piece of the Internet pie, you will definitely regard this as an unfair advantage.

It is not clear whether Yahoo will accept Microsoft's offer, but according to the Dow, investors love the idea and they are scrambling to take advantage of the profit windfalls that such an acquisition would bring. For Yahoo and Microsoft this may be the only chance they have of competing with a growing Google juggernaut. Nevertheless, it is inevitable that the Fed will be making the final decision as to whether these two giants can merge or not.

Sources

MSNBC.com
http://www.msnbc.msn.com/id/22947626/