Yahoo: If You Want Independence, Back Away From Google

Reports, rumors and innuendos are bouncing around the Web that Google (GOOG) may not want to cut an advertising deal with Yahoo (YHOO) after all. This before there is actually substantiation that Google and Yahoo are crafting an advertising deal, which was something of a rumor and innuendo in the first place, allegedly planted to let Microsoft (MSFT) know that Yahoo had options.

Google is allegedly worried about ticking off Washington officials who might think that if Google is playing ball with Yahoo, Google has become an antitrust violator that must be terminated. As if Google isn't already close to monopoly power in search. It gets 67% of all searches, and that share keeps growing. Google worrying that a Yahoo deal will push it over the brink in antitrust is like Kim Jong-il worrying that if he puts on a party hat he'll be considered crazy.

Then there's the other side: If Yahoo enters into this kind of crossroads deal with Google, it will be short-term gain for long-term pain. As I wrote in April when this idea was first floated:

You hand your search advertising to Google and you essentially belong to the Google camp for good. Google money is like heroin. This is what AOL (TWX) discovered when it did the same. Now AOL gets so much revenue from Google, it has no other options. If AOL wanted to be bought by Microsoft, for instance, and start using Microsoft search, AOL's revenues would go off a cliff. Yahoo would similarly find itself penned in strategically. All its growth options would also help its chief rival, i.e. Google, grow. What kind of existence is that?

If Yahoo does a Google partnership deal, Yahoo truly will be the next AOL.

Comments

[Marco Di Nucci]

Yahoo doesn't want indipence, Yahoo just wants more money.. and Microsoft also, wants to spend less money...

[retrobeast]

Kevin why do you waste your time typing such nonsense? YHOO will ride on GOOG coat tail and be a much higher priced stock because of it.
The goal is to make money for the company and the share holders.
A deal with GOOG will make much greater gains then a MSFT marriage would have, not too mention YHOO still gets to keep its independence.
YHOO is a screaming buy at this level and shareholders will be rewarded.

[bato sa bato]

Instead of Yhoo fearing Goog as to what had happened with Aol, why not use it as a case study and learn from all angles to avoid being the next AOL. As for any drugs when put to good use can also be a great life-saver or even be beautifier as in BOTOX!!

[guliamo]

You got it exactly Kevin!
The fact that Yahoo even suggested talking to Google just shows what a dead horse Yahoo is... can you imagine? turning your search over to Google for a couple of bucks? Killing a 3.5 billion dollar overture deal to fend off a hostile takeover.. Yahoo is over my friends.. Terry Zemel just botched that baby bad... and the halls are still filled with old media people who know nothing about the net or innovation.. I used to own Yahoo and made a ton of $$ out of it.. though I've long since sold, it's still sad to see what a pathetic pile of code this once great innovator has become..

[Calvin C.]

I see a great future for Yahoo. All they need is for Jerry Yang to step down & run as director because he's had so much bad PR lately; let someone run the show.