Why Google Should Buy Yahoo!

Robert Young via Publishing 2.0 : Why should Google (GOOG) buy Yahoo! (YHOO)? With the exception of search, Yahoo’s strengths map to Google’s weaknesses, almost precisely. Consider the following:

Yahoo! Mail, which accounts for almost 50% of the free email market, has more than 10 times the market share of Gmail;

Yahoo! Answers is a major hit… Google Answers failed;

Yahoo’s Flickr is a runaway hit… far outpacing Google’s Picasa photo site;

In critical verticals, like finance, Yahoo remains the clear leader despite much effort by Google;

Both Yahoo! and Google are cozying up to the newspaper industry with their respective efforts. Combine the two efforts and a successful outcome for all parties is almost guaranteed;

Want to acquire display/brand ad expertise? Forget DoubleClick — Yahoo’s ad sales expertise and relationships with big Madison Ave brands and agencies are far superior. Besides, as long as Google’s going to get scrutinized under federal antitrust regulators, and now Congress, might as well go through all that headache with the promise of a much bigger catch at the end.

I could go on, but I trust you get the gist. My point is that a merger of the two internet giants would actually be a case of strength combining with strength… and not weak combining with weak, as a Microsoft (MSFT) acquisition of Yahoo! would represent.

Put another way, such a deal would completely obfuscate Yahoo’s greatest weakness vs. Google, which is, of course, search. It would render that element almost irrelevant…whereas any other acquirer would effectively be inheriting that weakness.

Full Disclosure: Author owns both GOOG and YHOO.

Comments

[Robert DiAl...:]

Just don't think the government would allow a merger????

2007 Jul 22 03:46 PM

[akindman:]

Google should acquire the US government.

2007 Jul 22 03:56 PM

[admin:]

I have a slighlty different view on it - ideaposts.com/blog/

Talk about what Yahoo should focus on in addition the Search.

2007 Jul 23 12:20 AM

[cheapstockh...:]

Perhaps Coke should buy Pepsi also?

2007 Jul 23 08:15 AM

[oceandude:]

I agree. With Yahoo's current stock price this deal is possible. Google could cut a lot of waste from Yahoo also... I could see Google simply shutting down many of the niche Yahoo sites and save a bundle of $$.

The operational expense savings only with Yahoogle would be gigantic.

2007 Aug 02 12:22 PM