Microsoft may Buy Yahoo for 44.6 Billion

Microsoft Corp. has pounced on slumping Internet icon Yahoo Inc. with an unsolicited takeover offer of $44.6 billion in its boldest bid yet to challenge Google Inc.’s dominance of the lucrative online search and advertising markets.Offered 31 a share. AP

At the moment of writing this, Yahoo’s stock price is up about 50% to $28 a share while Microsoft’s stock price has dropped about 4.5% to $31 a share. MSN would be purchasing Yahoo at a 62% premium to Yahoo’s closing stock price Thursday.

It’s clear that both Microsoft and Yahoo’s search businesses have been getting hurt by their main rival, Google. Google already controls nearly 60 percent of the U.S. search market, and has been widening its lead, despite concerted efforts by both second-place Yahoo and third-place Microsoft. If Microsoft and Yahoo combined, they would have a 33 share of the current search market.

It is possible although unlikely that NewsCorp, AT&T or another company could try and come in and outbid Microsoft.

But what does this mean for the affiliate marketing and internet marketing industries?

First, there is a possibility the deal won’t go through. But if it does:

Will Microsoft use Yahoo’s search algorithm for its search engine results?

Will Yahoo use Microsoft’s search algorithm for its search engine results?

I think it’s most likely that MSN will keep both the search engines the same, at least initially. The next most likely thing would be Microsoft choosing to use Yahoo’s search algorithm and not vice-versa. In my opinion, MSN’s search algorithm has improved some as of late but it used to be by far the worst (and easiest to game) search engine among the three.

In any case, this is big news and something you will want to keep an eye on. I would not expect any drastic changes for at least 6 months. It could take awhile for the MSN purchase of Yahoo deal to be approved or denied.

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