Overheard: Word of the Day

Feb 3 2008   4:40PM GMT

Overheard: Microsoft-Yahoo vs. Google-AOL?

Margaret Rouse Margaret Rouse Profile: Margaret Rouse

yahoo_logo.jpg This time the rumors were true: Microsoft has made a $44.6 billion, $31 per share bid for Yahoo… Microsoft believes that the tie-up will give the companies needed scale in the online advertising space and is expecting at least $1 billion in synergies for the combined company.

Joseph Weisenthal, Microsoft Makes $44.6 Billion Cash And Stock Bid For Yahoo; 62 Percent Premium

This also adds urgency to another possible combo: Google-AOL. Google already owns a five percent stake in AOL and a full acquisition would aid Google on the advertising side as well as with traction and traffic in portal areas it has yet to conquer such as finance and sports.

This has the potential to be the first serious threat Google has had to their online advertising business and the first time the battle cry “antitrust” has been sounded.

Diane Mermigas provides a little background for those of us who may have missed an episode of this particular soap opera. The fact that Microsoft is going into debt for the first time to fund this acquisition illustrates just how important this deal is.

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