Friday, May 04, 2007

If Microsoft and Yahoo Merge, Where Does That Leave eBay?

The Rumor du Jour is that Microsoft is in talks with Yahoo for a merger of some sorts. According to the Wall Street Journal " executives of the two companies are looking at a merger or some other kind of matchup and said the talks appear to be early-stage discussions. It said the companies explored the idea of combining last year but the talks led nowhere."

While this is pure speculation it appears likely that something major is brewing with Yahoo being the key player. I can see why
Microsoft would want to do a deal like this because they keep losing ground to Google but as we have seen over the years, Microsoft rarely pulls the trigger on these types of deals. They talk and talk and then find they can't make a deal work.

Where does this potential marriage put eBay? If Microsoft and Yahoo merge, eBay will have a hard time going it alone. In my view, eBay needs to own search in order to lessen their dependence on Google and become truly the first stop in product search. I believe it would be in eBay's best interest to open up talks with Yahoo as a strategic move. If Yahoo is in play eBay needs to ante up. I would attend an eBay/Yahoo marriage because that would be a positive move for sellers.

Update: I have it on good authority that eBay is not interested in a merger with Yahoo. Meg Whitman was pretty clear in her comments at a recent conference. Of course these things can change quickly if both companies continue to struggle.

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