Microsoft's Ballmer Discusses Yahoo, Google, Integration Challenges

CEO Steve Ballmer said Microsoft and Yahoo would work together to create a single online advertising platform.
By J. Nicholas Hoover, InformationWeek -->
Feb. 1, 2008

Microsoft's $44.6 billion acquisition bid for Yahoo, one of the largest ever in the technology industry, would position Microsoft as a strong competitor to Google in the advertising and consumer online services market. But it also poses significant integration challenges for Microsoft and Yahoo.

"Any large integration process has risks associated with it," Microsoft CEO Steve Ballmer said Friday morning on a conference call with investors to discuss the bid. "I know we've all thought about it. We could have hired more engineers, but the market continues to grow and the leader continues to consolidate position. There's nothing like the chance to put together two large engineering organizations. A good integration actually should be quite an accelerant to progress."
Ballmer, Microsoft chief software architect Ray Ozzie, and other top executives said Microsoft and Yahoo would work together to create a single ad platform. It's unclear how the companies' portals and other services would be integrated, but Ozzie said a combined Microsoft-Yahoo would be able to create a "social platform" that could become a new entry point to the Web. "The combination of these two teams would enable us to jointly deliver a broad range of new experiences to customers that neither of us would have achieved on our own," he said.

The bid for Yahoo, at a 62% premium over the company's stock price at the end of the day Thursday, is one of the most open signs yet that Microsoft is desperate for ways to compete against Google in the world of online advertising, a market Microsoft estimates will double from $40 billion in 2007 to $80 billion by 2011. "Today this market is increasingly dominated by one player," Microsoft said in a press release. "Together, Microsoft and Yahoo can offer a competitive choice while better fulfilling the needs of customers and partners."

Kevin Johnson, president of Microsoft's platforms and services division, said on the conference call that Microsoft has already received unsolicited positive feedback on the bid from online advertisers and publishers. more


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