Giant mergers and acquisitions are not very common in the Internet world. However, recently Bill Gates' Microsoft Corporation offered a bid of 44.6 billion US dollars to acquire Yahoo!; soon after, Rupert Murdoch's News Corporation offered a counter-bid of 50 billion US dollars against Microsoft. A few days later, there were rumors that Microsoft indicated its willingness to raise its offer.
Gates and Murdoch - two of the shrewdest businessmen in the world today - why are they vying for Yahoo! with such large investments? In my view, their ultimate goal is not to fight over a "small sweet treat" - Yahoo! - but rather to seize a knife capable of slicing through "fat meat." According to statistics from Nielsen Market Research Company, 56% of Internet searchers use Google, 18% use Yahoo!, and only 14% use Microsoft. Consequently, advertisers favor Google, as 43% of the global annual Internet advertising budget flows into Google, while Yahoo!'s and Microsoft's combined advertising revenue still falls short of Google's.
Therefore, who is the "fat meat" that Microsoft ultimately aims to carve up? Of course, it is Google (Google). Google's "fatness" is mouthwatering.
On the other hand, between Microsoft and News Corporation, who will end up acquiring Yahoo!? It is most likely Microsoft. There are two main reasons. First, Microsoft has a stronger acquisition capability. Mr. Murdoch just spent 5 billion US dollars to acquire The Wall Street Journal not long ago, so he might be cash-strapped now, whereas Microsoft currently holds 19 billion US dollars in cash, and probably very few companies in the world have this much cash on hand. Second, merging with Yahoo! is merely an alternative opportunity for Murdoch, but merging with Yahoo! and subsequently defeating Google is a matter of life or death for Microsoft. In the past, Microsoft created MSN with the aim of overthrowing Google's dominance over the Internet. However, after spending 10 billion US dollars, Microsoft's MSN still couldn't keep up with Google's progress. What troubles Microsoft even more is that Google is preparing to offer a free online office software suite with functions similar to WORD and EXCEL. If users all start using Google's free software, who would still buy the extremely expensive Microsoft WORD and EXCEL? Therefore, Microsoft's final blade must be swung at Google.
Then, will Google become the "fat meat" under Microsoft's blade? This is difficult to predict. However, Google is indeed in decline. According to a recent report by IDC, Google's share of the Internet advertising market declined for the first time in the past two years. This is not a good sign. Moreover, the overall economic environment is unfavorable for Google to maintain its leading position. The United States is undergoing a major economic adjustment triggered by the subprime mortgage crisis, and the severity of its consequences may be no less than when the Internet bubble burst. After a significant stock market decline, Wall Street investors often abandon the "old heroes" and replace them with "new leaders." For example, during Yahoo!'s peak, its stock market value once reached as high as 110 billion US dollars. Later, when the Internet bubble burst, its stock price almost became "junk" stock. Subsequently, Wall Street investors began to favor Google, surpassing Yahoo! and making Google the new leader of the Internet that everyone looks up to. In other words, when the market environment undergoes drastic changes, it is also the time to replace the leader. Recently, Microsoft suddenly unilaterally decided to acquire Yahoo!, which was likely an attempt to take advantage of the current economic turmoil in the U.S. and knock down Google in one fell swoop.
However, Microsoft's almost perfect plan may not necessarily succeed; instead, it could become exceptionally weak due to difficulties in digesting Yahoo!, giving Google another chance to lead the Internet for ten years. Therefore, the real test for Microsoft lies in the days after the acquisition.
Using any of the software products developed by Microsoft allows one to appreciate its depth and breadth. However, on the Internet, most users dislike Microsoft but prefer the simplicity and practicality of Google. This means that Internet users have special needs that Microsoft neither understands nor knows how to satisfy. By acquiring Yahoo!, Microsoft essentially gains access to experts who truly understand the Internet. In 1994, Yahoo! launched its Internet directory service with the aim of helping Internet users in the fastest possible way. Since then, unlike Google which specializes in search engines, Yahoo! aimed to encompass all the needs of Internet users. For example, Yahoo! not only offers a search engine but also provides Yahoo! Music, Yahoo! Photos, Yahoo! Social, Yahoo! Bookmarks... These early investments by Yahoo! are gradually being recognized by Internet users. Reports indicate that the user traffic on Yahoo!'s website surpassed Google's for the first time at the end of last year: 137 million people visited Yahoo!, while only 133 million visited Google. This suggests that there is a possibility for Microsoft plus Yahoo! to defeat Google.
However, if after swallowing Yahoo!, the engineers at Microsoft hold onto a set of Microsoft solutions in their minds, while the engineers at Yahoo! harbor another set of Yahoo! solutions, both inside and outside the meeting room, will Microsoft, having swallowed Yahoo!, still see Google become the "fat meat" under its blade?