An alliance with Google might serve to deliver Yahoo from Microsoft’s clutches, at least for now, but is there a longer-term cost? There are at least three reasons why today’s deal could come back to haunt Jerry Yang.
Scale. If scale is essential for effective monetisation in the search business (the higher the volume of ads, the more efficient and liquid the market – the reason Microsoft gave for trying to buy Yahoo) then anything that increases Google’s scale even more – while reducing Yahoo’s – could tilt the balance still further in favour of the market leader. Read more