Shouting Yahoo! Bill Gates is fighting for the online advertising market. What made him think about the biggest deal in the global Internet market?
It would seem, who can envy the richest man in the world? It turns out, the youngest billionaire. True, in both cases, “former” must be added to high-profile titles. Last year, Mexican Carlos Slim ousted Microsoft founder and main owner Bill Gates from the top spot in the Forbes rich list, and 33-year-old Ukrainian Konstantin Zhevago stripped Google inventor Sergey Brin of the title of the youngest self-made billionaire. However, this does not change the fact that Bill Gates wants to buy the Yahoo! Internet portal in order to oust Google in the online advertising market.
The feeling was so strong that the founder of Microsoft expressed his willingness to acquire Yahoo! at a price 62% higher than the market value of the company. If the transaction goes through, then in terms of its volume - $ 44.8 billion - it will become the largest in the history of the global Internet market. What's more, Gates is so willing to compromise his principles that Microsoft may enter the borrowing market for the first time in its history. Now the largest software developer has accumulated about $21 billion in cash. Even though Microsoft is ready to pay no more than half of what was offered for Yahoo! the price, the available amount is still not enough. In addition, Bill Gates' company, judging by the statements of its management, is not at all ready to put all available funds on one, albeit very large, horse.
waiting for the boom
The amount offered looks monstrous, but do not be deceived. Bill Gates, as much as millions of Windows haters would like, is not crazy. According to the forecast of Zenith Optimedia, part of the transnational advertising holding Publicis Group, the online advertising market will grow three times faster than advertising in traditional media in the next three years. Its volume last year was estimated at almost $17 billion. At the same time, the overwhelming advantage in this segment is on the side of Google - 62% of all search queries against 16% that the Microsoft-Yahoo alliance could take!
Preparations for the boom in the online advertising market have already begun. Last year was marked by a real race of the main players in the Internet market for the relevant assets. Google bought the DoubleClick agency for the production and placement of advertising on the Internet, paying $ 3.1 billion for it. Yahoo! acquired an 80% stake in Right Media, an online advertising banner exchange system, for $680 million. Advertising and marketing group WPP Group announced the purchase of online advertising agency 24/7 Real Media for $649 million. And the largest transaction of its kind was the acquisition by Microsoft of online advertising agency aQuantive for $6 billion.
But the real wave of mergers seems to be yet to come, and the takeover of Yahoo! empire of Bill Gates. While Yahoo! did not officially respond to Microsoft's proposal. The company's press release says the proposal will be studied, a process likely to take a long time. However, most analysts studying the course of a potential deal agree that the offer will be accepted.
Microsoft's response
First, the combined efforts of Microsoft and Yahoo! can indeed give a synergistic effect, in which the power of the combined company will be greater than just the arithmetic sum of the terms. Secondly, the merger of the leading players in the Internet market will fit well into the logic of the development of the global economy. In the past two years, the world has been gripped by an epidemic of mergers and acquisitions. Recent examples include the creation of the metallurgical supergiant ArcelorMittal and the merger of Rusal, SUAL and Glencore, which led to the formation of the world's largest aluminum company. By the way, the last process has clearly not yet reached its logical conclusion: it is already obvious that Oleg Deripaska will stop only when Norilsk Nickel joins the united Rusal.
However, on the way to the formation of MicroYahoo! could become Google. The company does not hide its negative attitude towards the potential deal. "This is not just a financial deal where one company takes over another," said Google's chief legal officer David Drummond. “It’s about preserving the basic principles of the Internet: openness and innovation.” In the company of Sergey Brin, they draw apocalyptic pictures: in the event of a takeover of Yahoo! Microsoft will be able to block Windows-equipped computers from accessing other search resources. The first victim, of course, is called Google. Microsoft has given enough reasons for such assumptions. So, in the 90s, Bill Gates's company in this way - by blocking access to its own resources for users of the Netscape browser - practically ousted it from the market, providing unconditional leadership to its own product MS Internet Explorer.
In addition, Google has a strong personal motive. After the aforementioned purchase by Sergey Brin's company of the Internet advertising agency DoubleClick, Microsoft, which also claimed this asset, launched a targeted campaign to disrupt the deal. The software developer filed filings with the US and European Union antitrust authorities claiming that the merger between Google and DoubleClick would result in a monopoly in the online advertising market, so the deal should be banned. And if the American antitrust authorities as a result gave permission for the purchase, then the antitrust investigation in Europe is still ongoing.
Now Google has a chance to pay back Microsoft in kind. Buying Yahoo! must also be approved by the US and European antitrust authorities. Microsoft is optimistic that it expects all formalities to be completed by the end of 2008. Market analysts say a more realistic timeframe is early 2009. How long it will take to consider the issue if Google intervenes in the matter, no one undertakes to predict.
