Watch out Google: Microsoft and Yahoo! to Become Microhoo?

Google, be afraid, be very afraid….Microhoo is coming!

Last Friday (1^st February), Microsoft announced a $44.6 billion bid for rival Yahoo!. The bid would see Microsoft purchase Yahoo!'s outstanding common stock for $31 per share, 62 percent higher than the closing price of the stock on Friday.

Obviously concerned with Google's continued dominance and quest to control the online advertising industry, Microsoft believes the best way to catch up with Google is to join forces with Yahoo!. The two competitors have considered the idea of forming an alliance in the past.

Though the combined search impact is undoubtedly huge, a combined Microsoft/Yahoo! would be a major player in display advertising, benefiting from Yahoo!'s traffic volume and Microsoft's ad serving technology.

Calling the proposal "unsolicited," Yahoo! issued a statement exclaiming its Board of Directors will evaluate the offer "carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders."

Duncan Riley, from TechCrunch has put together a list of the main components of Yahoo! and Microsoft that he believes will stay and which will go if the merger goes ahead. We have included some of the main ones for you below.

MSN vs Yahoo! (front page)

The likelihood of the Yahoo! brand and front page being retired is zero and zilch, so that would put MSN in the spotlight. Microsoft launched MSN in 1995 so the brand has history; however Microsoft’s move towards Windows Live and Live.com branding has diluted the value of the MSN brand. Reports already suggest that Microsoft will have to divest its stake in MSNBC due to an exclusive supply agreement with NBC, so expect that MSN may be offered for sale as well.

It may also go some way in overcoming any potential competition concerns at a Governmental level. There's only so much room for key brands, and presuming (logically) that Microsoft will keep Live alive due to the Windows tie-in, MSN is the likely brand to go.

Conclusion: MSN to be sold or wound down in favor of Yahoo! and (Windows) Live.

Personalized Home Page: My Yahoo! vs Live

Yahoo! will remain, but the bigger question is exactly what Microsoft will do with Live. The brand won't disappear, but we may see it used in different ways, possibly even as Yahoo! Live or similar. The personalized Live product maybe on borrowed time.

Conclusion: My Yahoo! to stay, possibly Live powered by Yahoo!.

Yahoo! Search vs Live Search

Another hard one, but definitely a space where two will end up as one. Yahoo!'s search product has never been a strong point, and Microsoft has pumped a lot of money into Live. A combined unit that keeps the best talent from both may finally come close to creating a Google killer.

Conclusion: Live Search to replace Yahoo! Search on Yahoo!.

Search Advertising: Yahoo! Search Marketing vs Microsoft AdCenter

Microsoft has aggressively landed sites such as Facebook and Digg for its ads, where as Yahoo! squandered its opportunity with Panama. Neither platform is perfect, but on the balance Microsoft AdCenter will become the one platform across the combined company, with YPN to be integrated into that.

Conclusion: Microsoft adCenter will win the day

This is obviously exciting news in the search engine world; we will continue to keep you posted on any further developments. In the meantime feel free to let us know what you think of this possible merger by leaving a comment below.

Posted by Courtney Mills at 7:38 AM GMT