At first glance, the purchase of Yahoo! (YHOO) by Google (GOOG) would seem to be nonsense. Think about the antitrust problems. But, think about them again. The two major competitors that a combined company would face are Time Warner (TWX) with its AOL division and Microsoft (MSFT) which owns MSN and Microsoft Live. According to comScore, Micorosoft sites had more unique visitors worldwide than Google’s or Yahoo!’s and Time Warner’s sites are fourth.
The worst thing that can happen to Google is for Microsoft and Yahoo! to get together. Google’s lead in search is so clear now, that the only threat would be for Microsoft and Yahoo! to combine their shares, which would give them about 39% of the market to Google’s 48%.
Google could certainly afford Yahoo!. It has a market cap of $146 billion to Yahoo’s $38 billion.
And, Yahoo! might rather be a part of Google. Microsoft’s culture might be a big hard to take. Being part of an operating system company may attractive.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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