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Advertising - Monday, February 4, 2008

What Yahoo! By MSFT Would Mean For The Venture Economy

The suits along Wall Street love deals like MSFT's buy-out offer for Yahoo!. Yahoo!s management has screwed the pooch leaving vindictive Yahoo! shareholders feeling giddy about the prospect of Steve Balmer bringing down the whip. Even better there's the prospect of a bidding war for the decrepit Yahoo!.

Withing the venture economy, however, there are plenty of long faces. We talked with folks who make their living in search marketing who feel that it's time for a career change. Last year they could make a convincing case to clients that it requires brain surgeons to master spending across Google, Yahoo, MSN, plus B-leagers. If the MSFT/Yahoo! deal goes through then you might expect to see Google with 90%+ of search market share and MSN/Yahoo! with the rest. Goodbye search marketing industry.

Another reason for the long faces is that if the deal goes through startups will have lost a primary go-to-guy for liquidity. Despite its lousy stock performance and its painful passing on buyout deals that included Facebook, MySpace and Google, Yahoo! could be counted on to buy startups or at least contribute to the bidding up of prices.

It would be great if there was a new face in the crowd that could be counted on to take Yahoo!'s place as a force to provide a lift to the venture economy. But who would that be? Facebook maybe? Perhaps. Silicon Valley doesn't like oligopolies but that's what we are facing today.