Yahoo and the Acquisition Food Chain

One of the big stories of the Friday about to end focuses on the acquisition of Yahoo by Microsoft. The most recent post I’ve seen reported that the WSJ’s fifth article of the day on the acquisition claims that the deal won’t happen after all.

About 24 hours earlier, the same blogger (Michael Arrington) wrote another story about Yahoo and acquisition. The acquisition in question was that of Flickr by Yahoo over two years ago. Yahoo Photos will be closed over the next few months in favor of Flickr.

That’s fine by me. I have over a thousand photos at Flickr, and exactly one at Yahoo Photos. But real Yahoo Photos users may not be so pleased about it. To its credit, Yahoo will make it easy for them to move their photos to the service of their choice, even if it means losing them as photo customers.

This is not to argue against Yahoo streamlining its offerings by eliminating duplication, as recommended in the peanut butter email. It’s to point out that such streamlining has a cost, and that it’s taken Yahoo more than two years to make this particular decision.

That illustrates why Microsoft acquiring Yahoo would be a bad idea. There would be a lot of initial duplication, and a lot of time, attention, energy, and politicking devoted to managing that duplication. It would likely bear out a point made by Don Dodge of Microsoft (although Don was discussing a different deal). Billion dollar acquisitions are very difficult to integrate and very rarely produce synergies.

Microsoft and Yahoo need to focus on not getting killed by Google. An acquisition, while it might be motivated by that need, would be likely to get in the way of meeting it. By the way, the reason I keep referring to it as an acquisition rather than as a merger is that I consider real mergers (of equals) to be extremely rare.

I’ll finish by going back to Yahoo’s acquisition of Flickr. From where I surf, the deal seems to have been followed up well. Flickr hasn’t done anything un-Flickry. It continues to add features.

For example, Flickr will “soon” allow videos as well as photos and other images. So we will soon see many Flickr vs YouTube posts… but that’s for another day, since Friday really is about to end.

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