The battle for Yahoo
At MySpace headquarters in Beverly Hills, playbooks are stacked on desks as Rupert Murdoch's minions desperately try to make the numbers on a Yahoo deal work. Murdoch's News Corp. has joined forces with Microsoft in an effort to counter a deal with the mogul's old enemy, Time Warner. Google, which all old-line media companies fear, is approaching a bid with languorous rigor, running a small test of placing its ads on some Yahoo pages. It's all rather depressing.
Depressing, because Yahoo was supposed to be a bridge between the Valley, Hollywood, and Madison Avenue — not a battlefield. And once Yahoo is swallowed up, as it surely will be, those power centers will resume warring, to the benefit of their egos but at the expense of their customers.
Each suitor views Yahoo as something different. Microsoft wants to gain relevance in advertising and search. News Corp. wants to flip MySpace for a profit before its star fades further. Time Warner simply wants to rid itself of AOL, and all the bad memories of a failed merger. Google simply wants more pages to feed into its monetization machine.
No one wants Yahoo for Yahoo, save for embattled founder Jerry Yang. And he has not so much a vote in the matter as the threat that he'll have a nervous breakdown if the board sells his baby out from under him.
It is likely too late to save Yahoo. Indeed, it's not even clear if its suitors understand why they're pursuing it. News Corp. and Time Warner see it as a dumping ground for their online properties — but both would be shackled by a large stake in the enlarged business. Microsoft wants to apply its technology expertise to Yahoo's websites, but it surely underestimates the ruinous culture clash that would entail. Google doesn't really want to help Yahoo; it just doesn't want anyone else to run off with it. The result of any deal would be the status quo.
It's hard to see how Yahoo can escape the snare, and if it did, how it might once again pursue its ambitions of bridging the old world of media and the new. Cozying up to Madison Avenue's agencies meant that Yahoo missed the power of Google's automated ad-selling machine. Playing at being Hollywood studio made Yahoo's embrace of user-generated content too slow and to tentative. Someone will have to step into Yahoo's role. But its cautionary experience will scare away peacemakers. What once was middle ground is now scorched earth.