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Story/Software Tension Sighted In Potential Deal For Yahoo!

Posted by: Jon Fine on April 11, 2008

An unnamed source is buried deep in the big Wall Street Journal piece today, the one detailing some backroom manuevers in the whole Google/News Corp/AOL/Microsoft group-grope-cum-competition for Yahoo.

Said source says something interesting regrading Microsoft and media (emphasis mine):

The plan the two companies discussed, according to this person, was for Microsoft to operate Yahoo's search and advertising technology, while News Corp. would control everything else, including Yahoo's broad array of online media properties.

A partnership with News Corp. could allow Microsoft to focus on the software and technical underpinnings of online services while offloading content and information -- historically weak points for the software company -- to News Corp., which specializes in that realm. "All Microsoft cares about is search and the ad engine," one person familiar with the situation said.

I've been travelling and too under the gun on other stuff to properly weigh in on the whole Yahoo/Microsoft/Google/AOL/News Corp. thing, but one additional point in today's Journal piece strikes me as especially true.

People involved in the negotiations described an unusual level of uncertainty on everyone's part about what is real and what may be smoke and mirrors. It remains unclear -- even to the participants -- whether some of them are being used as stalking horses.

I'm reminded of running into a Microsoft executive during the whole Google/AOL/Microsoft dance of a few years back, back when Time Warner was preparing to sell a minority stake in AOL.

This executive was dead-set-100%-convinced that his company had won the day and would win a piece of AOL.

This executive, of course, was completely wrong.

But I'm still betting on Microsoft and Microsoft alone to take the prize--or take Yahoo, at least.

For whatever that's worth.



The media world continues to shapeshift as new forms arise and old assumptions erode. On this blog, Bloomberg Businessweek will provide sharp analysis and timely reports on the transformation of this constantly changing terrain.



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