Yahoo to seek an alliance with AOL instead of a takeover by Microsoft?
Observers must be wondering whether, in internet economics, a negative added to a negative gives a positive. In other words, whether two losers getting together can do something against the apparently overwhelming competition from Google. The failure of Microsoft's takeover bid for Yahoo this summer has already drawn criticism, in view of both Microsoft's rather luckless efforts at internet search and Yahoo's weak position. It is equally questionable whether an amalgamation between the troubled Yahoo internet group with Time Warner's wobbly online subsidiary AOL, has any better prospects of success. According to German press agency DPA, Yahoo is negotiating a takeover of AOL.
Financial software, services, news and data company Bloomberg reports that the plan would appear to involve Yahoo taking over AOL's portal and advertising business, with Time Warner, AOL's parent company, participating in the new group as a quid pro quo. At the start of the week, Yahoo's founder Jerry Yang announced his departure, giving fresh life to earlier speculations about AOL and Microsoft as possible partners for Yahoo.
Reports say that Yahoo and Time Warner executives met in recent weeks to negotiate details. Media giant Time Warner has long been seeking a new strategy or a buyer for AOL. The growing advertising business associated with internet searching is dominated by the Google group, while Yahoo is number two, followed by Microsoft and AOL.
Microsoft's chief executive, Steve Ballmer, also said, as recently as Wednesday, that he was open to cooperation with Yahoo on online searching. On the other hand, he categorically ruled out a takeover of his competitor. Just this summer, Microsoft's multi-billion-dollar offer for Yahoo was rejected. By turning down that offer, Yahoo's Yang annoyed many shareholders, and that ultimately led to his taking an early shower. Yahoo's plan for cooperation with its competitor Google likewise came to pieces a few weeks ago. AOL has already, for years, been collaborating with Google.
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