Keith Watanabe * NET 2.0

So it seems, at least according to the various news sources.  This is huge and tons of speculation has been going on.  I've done my own speculation on the buyout, thinking at first it was a natural pairing.

On second thought, the idea horrifies me.

It horrifies me, not in the thought that M$ and Yahoo would be this mega corporation.  But it horrifies that it's really a dumb idea.  For both companies.

Both companies see Google as The Enemy.   This is erroneous thinking and a myth that's become perpetuated horribly in Silicon Valley that people have been utterly brainwashed by the hype. 

Google is simply a company with a lot of innovation, a vision of how it wants to shape the future, and it's uncompromising nature to make good on that vision.  Yahoo, M$, Ballmer, and a lot of other people see it as simply a territorial war in ad space.  Ads are the only thing that fuel Google and it's probably why Ballmer wants to strike them in that area.  Honestly, there's absolutely zero reason for M$ to get into that market in the first place because they dominate in so many other markets.

But when I look at M$ after Bill Gates stepped down, I realized that they took an incredible misstep in promoting Ballmer to the position of CEO.  Ballmer, for all intents and purposes, is indeed the stereotypical Pointy-Haired-Boss from Dilbert.  Heck, I'm certain Scott Adams must've got his inspiration from some where :p  Ballmer was an operations guy, someone who knew how to streamline the internal business.  But as far as a leader in technology, Ballmer lacks vision, except tunnel vision.  One slashdotter aptly put it that Ballmer's myopic quest to end Google is probably going to end up killing whatever dignity M$ has left.

The combination of Yahoo and M$ would be horrible for the industry.  People predict that the acquisition would make the combined companies stronger in terms of a rival for Google.  Instead, the truth is that the acquisition would end up killing both companies while Google sits back and watches the flames spurn from the distance.

I believe that the acquisition would cause more irrevocable harm to both companies because it'll simply bloat M$ up even further than it is.  Think about the internal politics, the restructuring, the name calling when it comes to using which product.  Both companies have incredibly strong personalities and senses of identity.  So a merger would just rip into the fabric of time and space.

And it'll make both companies even less agile in this market.

Google's internal culture promotes agility as much as a company of that size can.  In Ballmer's obsessed state, I think he'll go mad micromanaging what stays and goes in the Yahoo brand.  Why would there even be a Yahoo brand after the acquisition?  Everything would be re-branded and slowly migrated to a decaying Vista platform.  Then the services would grow slow, less open, and charged.  In the meantime, companies like Facebook and Google will continue to open up their services and give out the crack called open source and APIs to hungry developers that will consume up such gifts while M$ begs old customers to stay on their aging platform.

This is the reality of what will happen if this acquisition goes through.

Now, to Mr. Jerry Yang.

My advice to you is this.  Your shareholders are important, but money isn't everything.  M$'s deal is their own poison and they don't even realize it.  All the work you've striven to accomplish with the Yahoo brand will slowly fade.  And honestly, do you really need more money? 

Move away from the deal.  If you take it, you will be one of the most despised men in the industry.  All your loyal Yahoo employees will migrate away to companies like Google, Facebook (if they haven't already) in disgust at your selling them out.  The Yahoo must remain independent to allow for people to choose.  Terry Semel did a lot of damage in a similar manner that Ballmer is doing to M$.  But if you want to correct the damage that Semel did, you must allow the Yahoo identity to remain, give the customers what they want and show guts and vision in this period.  Yes, Yahoo isn't doing well financially as expected, but many companies will face a similar crunch in the coming quarters.  That's how the market is just going to react from the greed of the housing market.  The buyout is nothing more than a short term snort of cocaine for your investors, but in the end they'll lose and you'll lose.

Don't sell Yahoo to M$.  It's a bad deal.

Besides, if you do sell to M$, Google will simply buy Sun and merge with Apple.  Then what are you going to do?