Is Microsoft after Yahoo's paid-search patent?
Yahoo's board has called Microsoft's on-and-off pursuit of their company "erratic." Not that their behavior's been that straightforward, either. But could there be more to the imbroglio than Jerry Yang's founder ego and Steve Ballmer's desperate grasping at relevance on the Web? Blogger Usman Latif has a theory: It's all about "'361," a patent Yahoo obtained when it bought paid-search pioneer Overture in July 2003. The patent covers the basic business model of letting advertisers bid to place ads against keywords — the heart of Google's multibillion-dollar revenue engine. Latif's thesis: Microsoft doesn't want Yahoo's people, products, or market share; it just wants to get its hands on this patent, so it can use it to knife Google.
Microsoft flirted with acquiring Overture, but Bill Gates ultimately nixed the deal. Instead, Yahoo CEO Terry Semel bought the company, launching it into the paid-search business in competition with Google, which had been contesting Overture's patent. The companies ultimately settled and Google agreed to license the patent, but the terms of the settlement were murky. Tellingly, Google's SEC filings mentioned that the license was "fully paid" and "perpetual", but not, as is usually done in such licenses, irrevocable.
Could Yahoo — or Microsoft, if it succeeds in acquiring Yahoo or Yahoo's search business — revoke Google's license, and thereby put billions of dollars at risk? Unless the companies reveal the terms of the agreement, we won't know. It doesn't seem plausible that Google executives would risk massive fraud lawsuits by hiding such a big vulnerability.
But it certainly explains why Microsoft keeps making a run at Yahoo — and why Yahoo insists it's undervalued. But would Steve Ballmer really offer $45 billion of Microsoft shareholders' money to destroy a rival? That's the one part of this outré theory that really fits.
