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Yahoo is celebrating Valentines day on search results showing hearts along right side advertisments.

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For those of you who like long boring documents, Yahoo and Google released a castrated version of their agreement.

In a filing with the U.S. Securities and Exchange Commission, the companies take the unusual step of disclosing the contract governing the partnership, but leave out any financial terms, such as the revenue split on their deal. - Reuters

Another quote from Reuters:

Rivals such as Microsoft Corp have protested that Google already controls 70 percent of the Web search ad market and that a Yahoo deal would give Google control over 90 percent of the market. Google and Yahoo executives have defended the pact, saying they will compete aggressively in other areas.

Is Microsoft being sarcastic? They own the desktop and protest against monopoly! Its like shooting a guy in the head, then paining a banner and walking on the streets in protest of violence.

the contract is heavily redacted in an area that covers “other business opportunities” and is silent about how the sharing of user data between the partners could affect the privacy of Yahoo users.

Read another review on CNET and on search engine land.

Microsoft’s 3 week deadline had expired and now press is anxiously waiting for the next big move. Microsoft threatened to proceed with the hostile take over strategy, however, not one publication mentioned possible scenarios for far.

Charlie Rose interviewed on blog.pmarca.com 2 corporate lawyers who outlined possible scenarios of a takeover. Here is an interesting snippet:

“Yahoo’s best defense against a tender offer is its poison pill. The poison pill works like this: if Microsoft acquires more than 15% of Yahoo without Yahoo board approval, the poison pill kicks in and issues a flood of new Yahoo stock into the market in such a way that Yahoo becomes much more difficult and expensive to buy. Poison pills have been used as defensive mechanisms by public companies against hostile takeovers for years, and the dilution they cause is so huge that no poison pill of this type has ever been triggered.”

If you are interested in corporate strategy and details involved in the process we recomend reading this report.

Related posts:

• April 24th Microhoo Update
• Microsoft Gives Yahoo 3 Weeks and Yahoo Wants More Money
• Microsoft is Serious About Search
• Microsoft is going after search regardless of Yahoo
• CNN Predicts Yahoo - Microsoft will most likely happen
• Google isn’t too happy about Microsoft Yahoo Merger
• Yahoo and News Corporation want to Engage
• Yahoo says no to Microsoft
• Microsoft announced it wants to purchase Yahoo.

Microoho Update.

Search News in the world of search engines and SEO for April 24th 2008.

• MicroHoo: Let The Proxy Fight Begin!

Seattle PI is speculating that Microsoft had begun its proxy fight for Yahoo through its board members. The goal here will be to influence board members to push Yahoo members into accepting $45 billion Microsoft bid. Yahoo says the offer is too small which is true. Not so long ago it was valued at $90 billion. Though those times passed, a solid number 2 is more then half of the past value.

• US Justice Department Scrutinizing GooHoo Paid Search Test

In effort of making Microsoft raise the bid, Yahoo started outsourcing ads to Google. Yahoo has its own ad system - Panama, but it is possible it would abandon Panama and completely outsource search to Google. This puts dangers on search ad industry as essentially Google will own it 90% of the way.

• Yahoo’s Q1 Profits: $542.2 Million

Yahoo Profits to up to $542.2 million as opposed to $142.4 million last quarter. Yahoo stock is back to $27.30 from low $18. It only makes sense for Yahoo to stand its ground and not submit to Microsoft.

Yahoo should Stand its Ground and Get away from Google

As much as I like big blue G, I can’t think of a worse partnership then Yahoo and Google. Google is already flying above 60% market share. Control of Yahoo’s ads would put it in 90% of the search ad market. A monopoly of this kind is dangerous for any industry and law makers should keep their eye wide, wide, wide open. Though Google is simply making steps towards its well being and takes advantage of the situation to the fullest, I would not put 90% control of the market in any hands.

On Saturday Steve Balmer CEO of Microsoft wrote an open letter to Yahoo saying it has 3 weeks to accept an offer or it will face a proxy fight.

“If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board.”

Yahoo replied with their own letter stating that they do not oppose the takeover, but want more cash on the offer.

“At the same time, we have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo!, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders.”

It seems that the deal is eminent and it is a matter of when when, how and how much. Microsoft does not want to open up the wallet further and Yahoo feels they are under valuated.

The Search Engine War

“We won the desktop. We won the server. We will win the Web. We will move fast, we will get there. We will win the Web.” - Steve Balmer 2005

The problem is that Google won search by innovation and Microsoft wants to do the same with cash. Microsoft needs dedicated and enthusiastic employees to make a real difference. Even with Yahoo, the morale in a company of that size is not too entrepreneurial. The only way Microsoft will win search is by purchasing Google.

Microsoft is going after search regardless of Yahoo.

Microsoft announced today it will be going after $100 billion dollar online advertising market regardless of Yahoo!

Quoted:

"We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo," said Gates in an interview with Reuters.

"But we also see that we’d get there faster if the great engineering work that Yahoo has done and the great engineers there were part of the common effort," said Gates, who is Microsoft’s biggest shareholder.”

He also stated that the bid is fair $44 and will not change. This puts more pressure on Yahoo’s board as it must work out a deal with News Corp or face a take over from Microsoft.

Microsoft is not in a good position to go after search market alone, since it’s quality lumps well behind Yahoo not to mention Google.

CNN Predicts Yahoo - Microsoft will most likely happen.

CNN has released an article which predicts that Yahoo is most likely to be swallowed by Microsoft, because there are not many options left on the table. Annalists say that Yahoo can either outsource search to Google(outright defeat) or score a deal with News Corp., which can buy out 20% of Yahoo.

Most say that New Corp talks are simply a sweetener to get a better price from Microsoft, as it is desperate to compete with Google. Here is what CCN had to say:

“In the fourth quarter, Google’s revenue jumped 51% to $4.83 billion vs. the year-ago period. Yahoo posted fourth-quarter revenue of $1.83 billion, up 7.6% from a year ago.

In December, Google handled 5.6 million search queries in the U.S., up 30% from a year ago, says research firm comScore Networks. Yahoo ranked No. 2 with 2.2 million searches, down 4%. Microsoft came in third with 940,000 searches, up 8%. Likewise, Yahoo’s paid search service, known as Panama, and Microsoft’s adCenter business don’t generate nearly as much revenue as Google. Merging the two services could be a problem, says David Hallerman, senior analyst for research firm eMarketer.

Google has become a household name by providing quick and reliable answers to search queries.

“If you buy Yahoo, then you just get what traffic they had,” he said. ” Google has been slowly but steadily gaining share from Yahoo, so the question becomes whether a combined Microsoft-Yahoo entity can get that (search) number higher.”

VP of Google showed his concern about Microsoft’s take over of Yahoo, going into the length of mentioning Microsoft’s unethical and illegal activities that helped it monopolize PC market. Here’s a some excerpts.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies — and then leverage its dominance into new, adjacent markets.”

“Could the acquisition of Yahoo! allow Microsoft — despite its legacy of serious legal and regulatory offences — to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors’ email, IM, and web-based services? Policymakers around the world need to ask these questions — and consumers deserve satisfying answers.”

So Google isn’t happy about Microsoft takeover? Understood, its Google biggest enemy and when enemy makes a good move – you cant be too happy about it.

Microsoft’s attempt to take down Google miserably failed with launch of Live search and Yahoo is their only hope for the future.

Microsoft on the internet is like Goliath of ice – it cant skate for crap!

Though Microsoft has monopolistic status over OS market, Google is moving in the same direction of search. One thing that differs Google - is the game plan, which is very fair. People voluntarily choose to use Google, simply because of its relevancy. It takes care of its users to the last bit.

For example, if you Google the same term 2-3 times in the row, Google will remove PPC on top of results to make sure people find what they want as opposed to making money. It also integrated universal search, so people find local businesses fast and easy.

On the other hand… Microsoft? Its recent launch of Vista shows that Microsoft does not care about user experience. It goes to length of using people as beta testers, giving people a bad product – to be fixed later.

Google concerns are understood, as Microsoft a formidable player and ain’t going away fast. Yahoo deal is the biggest in search news this month and we’ll keep you updated.

In an attempt to avoid Microsoft takeover, Yahoo is negotiating with Rupert Murdoch’s News Corporation, parent company of myspace.com and FOX News.

According to a report by Techcrunch, News Corp wants to invest in Yahoo and buy shares totalling $15 Billion, making it the largest stakeholder of the company.

It is said the negotiations should end in 48 hours, in time for Yahoo’s board meeting.

Yahoo says no to Microsoft.

Over the weekends Yahoo board headed by Jerry Young discussed the proposed take over by Microsoft for $45 billion at 31$ per share and declined the offer. Times UK reports that Yahoo raised its price by $12 billion at $40 per share.

It also mentions that Yahoo is in talks with AOL for some kind of partnership, where Google holds 5% stake.

Yahoo experienced an eight quarter decline in profits, largely loosing customer base to Google. As Google continues to dominate search, Microsoft sees it as a threat to its future, with only one solution – Yahoo.

Jerry Young(CEO) and Yahoo board might be playing on that fear in hopes of getting more money out of the deal, as microsoft went for a bargain, giving the 5 year low price.

It is not yet clear what partnership Yahoo is hoping to get with Time Warner(AOL).

San Francisco Chronicle talks about Yahoo outsourcing its advertising to Google, while 2 companies split the revenues. Outsourcing advertising with would allow Yahoo to cut costs, increasing its share value.

Though this would save Yahoo! From Microsoft, it would become dependant on Google, which already owns more then 60% of world wide search market. Also antitrust would burst into reaction, as it did with proposed doubleclick deal, which barely competes with Google.

With rejected Microsoft offer Jerry Young now must convince the board he is capable of raising Yahoo! stocks to at least $30 per share, as Yahoo`s future does not look to bright at the moment.