BILL'S HARD DRIVE
MICROSOFT EYES SEARCH GIANT IN PROPOSED TAKEOVER — Stung by the loss of Internet advertising firm DoubleClick to Google last month, Microsoft has intensified its pursuit of a deal with Yahoo!, asking the company to re-enter formal negotiations, The Post has learned.
Context & Ripple Effects
Microsoft has been circling this deal space before: back in December 2005 it was reported to be weighing a partnership to counter a possible Google-AOL combination, and when DoubleClick put itself up for sale in March 2007 (exploring a sale) Microsoft lost the bidding to Google. That defeat left the company without a major display-advertising network at exactly the moment Google was locking up publisher inventory.
Per the Post's reporting, Microsoft has asked Yahoo! to re-enter formal takeover negotiations. The timing matters: Microsoft just closed its confirmed purchase of mobile-ad firm ScreenTonic to widen Microsoft Digital Advertising Solutions, while Yahoo! is pruning consumer properties — shuttering Yahoo Photos and consolidating around Flickr — suggesting both companies are actively reshaping their portfolios around fewer, larger bets.
First-order effects
- Yahoo!'s board faces renewed pressure to engage in formal negotiations with Microsoft, a step beyond the informal overtures that preceded this approach.
- Google, having taken DoubleClick, starts from a position of strength in display advertising that neither suitor can match organically — which is precisely why Microsoft is shopping.
Second-order effects
- Yahoo!'s independent product moves — the rumored new search interface being tested on UK users and the Flickr consolidation — become bargaining chips, since any merger would absorb or reprice those assets.
- Publishers and advertisers watching the DoubleClick fallout now face the prospect of two mega-platforms divvying up premium ad inventory, tightening alternatives for mid-size networks.
Third-order effects
- If Microsoft-Yahoo talks progress, the web-advertising market consolidates structurally around scale: search plus display plus mobile reach bundled inside one or two giants, with ScreenTonic-style tuck-ins becoming the standard way to fill capability gaps.
- A failed negotiation would push Microsoft toward smaller acquisitions instead, reinforcing the pattern that portal-era companies buy rather than build their advertising businesses.
The trend: Internet advertising is consolidating through acquisition rather than organic buildout, with the DoubleClick outcome accelerating Microsoft's turn toward Yahoo!.