AOL to Yahoo!: Let’s Talk

16 Jul 2008

Remember AOL? The little spanner in the works of the ‘Microhoo!’ talks seems to be talking to both companies in the hopes of a deal with either, whereas back in February it looked as though AOL was going to be bought by Yahoo! in favour of the latter accepting Microsoft’s US$44.6bn hostile bid.

AOL’s parent company Time Warner had already split off its ISP business from its online advertising and web platform, which makes it a more attractive proposition for either Microsoft or Yahoo! as they seek to ramp up their advertising as competition for Google.

It’s anyone’s guess what way these talks could go, especially given yesterday’s accusation from Microsoft head of legal affairs, Brad Smith, that Yahoo!’s CEO, Jerry Yang, was conspiring with Google to force Microsoft out of the search-advertising market.

This followed the 6 June search-advertising deal that Yahoo! made with Google back in April 2008.

Smith said that at a meeting with Yang back in June, the Yahoo! CEO had talked about the deal in the context of a ‘bi-polar market’, where Google was on one side while Microsoft and Yahoo! were on the other.

Yang allegedly explained that the deal with Google would strengthen Google’s side, which would effectively force Microsoft out of the market.

Whether these allegations are true or not, they do point to a perceived reluctance on Yahoo!’s part to have anything to do with Microsoft and may signal a definite deal with AOL, as well as with Google.

The question is: if this pushes Microsoft out of the search-advertising market, what will it do to prevent this happening?

By Marie Boran