Microsoft Crosses The Line

http://www.techcrunch.com/2008/07/08/microsoft-crosses-a-line/

by nickb • 18 years ago

24 34 18 years ago

raganwald5• 18 years ago

Microsoft/Ballmer's behaviour has been entirely consistent with their reputation as take-no-prisoners bullies. Bullying is all about destroying and humiliating people. It is all about intimidating a crowd of people by making an example of someone.

I seriously doubt anyone, even Microsoft shareholders, are cheering Ballmer on. Actually, I revise this: I especially doubt Microsoft shareholders are cheering Ballmer on.

The key here is to understand what "Destroying Yahoo" means. Does it mean pillaging Yahoo and taking its assets? No. Instead, destroying Yahoo means putting its people and customers on the open market.

Who stands most to gain from Yahoo's people and customers being on the open market? Google, the market leader. ABove and beyond the deal Google has already done with Yahoo, Google has the most to gain from Yahoo' slide into irrelevance.

When at the end of this process Microsoft acquires Yahoo for a pittance, Ballmer will congratulate himself for paying so much less than B$44. But this is like setting fire to a house you wish to buy and then allowing its neighbours to build on what's left of the property.

Ballmer may take a victory lap, but I believe that Google will be the ones drinking champagne.

bigbang• 18 years ago

The bullying by Ballmer and co, is 1.Throw the current board out bcos it didnt agree with MS. The current board can be thrown by MS by telling that there is a chance that they come back, so shareholders will vote for Carl. 2.Grab Yahoo for even cheaper as with Carl on board there is no other option for growth other than by selling.

gizmo5• 18 years ago

No, the board should be thrown out because it acted against the wishes of the shareholders. And in a public company the shareholders are king. Ballmer has nothing to do with this. Carl is in it for the money - so he probably wants to chop the company up.

raganwald5• 18 years ago

While I agree with your 1-2-3 analysis, my thesis here is that given the choice between (a) negotiate with Yahoo now and (b) tamper with Yahoo's board and negotiate with them later, option (a) gives Microsoft the most. Yes, they will pay much less later when they have gotten rid of everyone who considers independence an options, but they will also have watched the talent and customers walk out the door.

The price may be falling over time, but I conjecture the value is falling even faster.

edw519• 18 years ago

Bullying is all about destroying and humiliating people. It is all about intimidating a crowd of people by making an example of someone.

Tactics effective in a monopoly are seldom as effective in an oligopoly.

aneesh• 18 years ago

Yahoo! has a brand and name recognition, and many Yahoo! users are non-techie people who are barely even keeping up with what's going on. I doubt the exodus of Yahoo! VPs or whatever Icahn does will affect their choice of search engine. Microsoft is buying Yahoo! for it's users and brand, not for its employees or technology. So in a sense, "destroying Yahoo!" is just fine with Microsoft if it doesn't drive users and advertisers away.

mattmaroon4• 18 years ago

Right, I don't see the average consumer switching from Yahoo to Google because of what they read in the Wall Street Journal.

mattmaroon4• 18 years ago

I agree with much of that assessment provided Arrington's version of what really happened is true. That seems to be a big if though.

I doubt anyone knows what really happened on both ends. Pretty much the only thing we know for sure is that Yahoo's board did not act in the best interest of its shareholders.

Also, say what you want about it from a moral standpoint, but ensuring that people either take you seriously or suffer tremendously for not doing so is good business. They're ensuring that in the future, any potential acquirees will be very fearful of pissing off Microsoft, which is very good for them. It's more than just an ego-driven Ballmer being a douche bag, it's sound strategy.

raganwald5• 18 years ago

"Ensuring that people either take you seriously or suffer tremendously for not doing so is good business. They're ensuring that in the future, any potential acquirees will be very fearful of pissing off Microsoft, which is very good for them."

Very true for future hostile take-overs, but I have a feeling that when Microsoft goes courting friendly take-overs--such as when they want to do an HR acquisition and actually want to get the company with management and R&D intact--they will get a lot of people trying to act like they were out flying their plane when Ballmer knocked on the door.

JM2C

railroadmike• 18 years ago

Excellent analysis ragan. But I would be even more succinct. Microsoft plus yahoo is still just dumb ol' microsoft and the combination is going to have no more success against Google than microsoft alone or yahoo and microsoft separately.

Microsoft was once king but something called Google came out of nowhere to steal it's thorny crown. When Google loses it's crown it will be from something that comes out of nowhere again.

Get working guys. It could be one of you.

TweedHeads• 18 years ago

I still can't believe how ballmer is the head of microsoft, all he brings to the company is embarrassment and failure, not a single victory in a decade.

Any resemblance to our president is just a mere coincidence.

gizmo5• 18 years ago

Ballmer and gates are both extremes. Gates always wasted heaps of money, starting up projects and killing them again... have different groups build the same software (then kill the least successful project)... buy companies on a whim, and so on. Being wasteful is not the end of the world if your revenue grows with 500% each year, but it doesn't make the shareholders happy.

So with this tactic Microsoft started to dominate every field in software. At that point the waste started to add up so Gates got Ballmer to clean it up. And when Ballmer became CEO he did cut the waste and made MS tremendously profitable. A great accomplishment. However, now it's time (and has been for a few years) for somebody technical to take charge again.

jimbokun• 18 years ago

Alternatively, perhaps it is time to treat MSFT like the dividend stock that it is, acknowledge that it has probably peaked as an industry force, and channel the slowly ebbing value accumulated into shares of MSFT into grand philanthropic ventures.

I think Bill chose this route.

fallentimes2• 18 years ago

Can Techcrunch wait until something actually happens before writing about the same thing for the 14th time?

astine• 18 years ago

What are you talking about? This was news on NPR this morning. They've already expressed the new terms.

fallentimes2• 18 years ago

That epitomizes the problem. There's been so much noise from Techcrunch about MSFT and YHOO, it's very hard to decipher what's actually news/important.

byrneseyeview2• 18 years ago

"Since then, Yahoo has quite literally prostrated themselves before Microsoft to get a merger done, even perhaps at a price much lower than Microsoft’s original bid."

You know, I thought this was an error. But look!

"Pronunciation

IPA: /ˈlɪtəɹəli/, SAMPA: /"lIt@r@li/

   1. In the direct, word for word sense. With neither idiom nor metaphor.

"When my sewing kit fell off of the barn loft, I literally had to look for a needle in a haystack."

   2. In a non-direct, figurative sense. Not literally.

"When I saw that Michael Arrington, someone who writes for a living, use the word "literally" to mean "figuratively", my eyes literally exploded with figurative rage."

Also, in case anyone needs a memorable explanation of when not to say "literally", consider: http://www.craigslist.org/about/best/van/144733448.html

gruseom• 18 years ago

Heh, that's good. What other words mean both X and the exact opposite of X?

byrneseyeview2• 18 years ago

We have formed an oversight committee to avoid repeating that egregious oversight.

Edit: Here's a collection! http://www-personal.umich.edu/~cellis/antagonym.html

bockris• 18 years ago

'cleave' is always the one I remember.

http://www.fun-with-words.com/nym_autoantonyms.html

and

http://www-personal.umich.edu/~cellis/antagonym.html

mattmaroon4• 18 years ago

TechCrunch is in dire need of a copy editor. I'm pretty sure everyone who writes there simply types their article into Wordpress and clicks publish. Even typing into MS Word first would help, since the built in grammar checker would catch a nice chunk of them.

LogicHoleFlaw• 18 years ago

My knowledge of business at this level is incomplete. What would be the implications of replacing Yahoo's board of directors?

gizmo5• 18 years ago

Depends on the people you appoint.

If you get a combination of technical people and business people who both want Yahoo to thrive as an underdog all will be good. Yahoo will stay independent and will probably do some great things in the next few years. Without Yang the new board will have to prove itself, so you can expect the new board to spend a lot of money in research/acquisitions. When a company is fighting for its survival you can expect great things to happen. So with a new board Yahoo will have to innovate and surprise us all.

If you appoint people for one purpose (selling the company), then that's exactly what will happen. Because the purpose of a merger between Microsoft and Yahoo is (partially) an "increase in operational efficiency" Ballmer will definitely get rid of thousands of jobs (= save money). Therefore, before the merger happens a lot of good people will leave (for google) and a lot of mediocre people don't want to wait for the axe to fall. The stock would normally crash as a result, but the promise of MS buying Yahoo will keep it reasonably healthy. (If MS walks away after the board is changed Yahoo is fucked.) So MS buys Yahoo, the shareholders and board of directors get their money and wall street is happy. Ballmer will start handing out pink slips and save billions. MS shareholders will be very happy.

So in the short term the MS-Yahoo deal works out for everybody. MS and Yahoo shareholders get more money and a lot of waste is cut out of Yahoo. Okay, it doesn't work out for the employees who become redundant, but that's to be expected. On the long term it doesn't look so great. The merger will make it even harder for MS to adapt to changes as it becomes even bigger, and squabbles within MS will make it harder to get anything done for everybody.

The entire deal is basically a short-term versus long-term issue. Either you want to cash out now (and sell Yahoo) or you want to wait it out and hope things get better. Yang, as one of the founders, thinks long term and stays positive. Investors and shareholders, by their very nature, think short term. Hence the conflict.

rw• 18 years ago

"Okay, it doesn't work out for the employees who become redundant, but that's to be expected." This is actually, you know, a really bad thing for them. They have families and no trust funds.

rbanffy2• 18 years ago

It seems Ballmer likes to play with his food.

josefresco• 18 years ago

The correct analogy would be that Ballmer is "licking his cookie" so know one else wants it.

And no, that was not a sexual reference, think middle school lunch room.

rbanffy2• 18 years ago

I was thinking more in the lines of killer whales playing with their prey.

giles_bowkett• 18 years ago

I didn't pollute my mind by reading this - I only saw it because of some bug in my TechCrunch-links-screening script - but what on earth could make somebody think that Microsoft crossing the line could be news? That's all they ever do.

Microsoft Crosses The Line

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