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A Microsoft-Yahoo! Deal User's Guide

When Microsoft CEO Steve Ballmer couldn't coax Yahoo! boss Jerry Yang into a deal, he went hostile
When Microsoft CEO Steve Ballmer couldn't coax Yahoo! boss Jerry Yang into a deal, he went hostile. But smooshing together MSN and Yahoo! would be difficult. What would their mutant love child look like?
From left: Ballmer: Nancy Kaszerman / ZUMA; Yang: Paul Sakuma / AP
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But you're already a winner, since you're a buyer in a market where supply greatly outstrips demand. Seriously, if Microsoft's $44.6 billion bid for Yahoo! means one thing, it's that advertising--not subscriptions or surveys or micropayments--is the engine that Internet content will run on. This is a victory party for online advertising's long boom. According to a Yankee Group report, online advertising rang up $16.9 billion in revenue in 2006 and could grow 24% a year or more. It's still a pretty meager slice of total ad spending--only 7.5% last year, according to the report. But expect that to change. "An industry that was pretty much left for dead five years ago is right back beyond where it was in the peak of what we now call the bubble days," says Andrew Frank, media-research vice president at Gartner. "People in the moment tend to lose the perspective on that."

If You're the Average Web User

You always get forgotten in all the excitement, don't you? Well, you probably won't see any noticeable changes for a while. Eventually--this could take years--MSN and Yahoo! will merge, Live Search and Yahoo! Search will merge, Hotmail and Yahoo! Mail will merge, and so will the two instant-messaging services. You'll see some minor technical glitches along the way.

That's the obvious stuff. Now for the subtle stuff. As Google and Microsoft get more competitive over ads, you'll see new kinds of ads, and in new places, like on your cell phone. Your traffic will become more valuable, and you'll see, if you look carefully, underhanded ploys to secure it. Microsoft has pinned a lot of its hopes for future growth on this business. The risk with a huge, diversified entity like the merged Microsoft-Yahoo! is that it would get up to dirty tricks like diverting Web surfers to its own pages rather than to the most relevant search results. That would subvert the Web's promise and your power to choose. Don't let them do it.

You have the power. If advertising is the engine that Internet content runs on, your attention is what fuels that engine. As big as this deal is, it's really just you that everybody's fighting over.


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