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Playing The Devil's Advocate About Microhoo

Daring Fireball's John Gruber says his gut feeling is that the Microsoft-Yahoo deal would be a disaster, but he notes that it could work out to be a triumph for Microsoft -- but only if Microsoft acts in a very, very un-Microsoftian way.

Gruber writes:

Where popular Yahoo products and services compete against Microsoft's existing products, let them co-exist in competition. Think of Microsoft's parent role as that of a media conglomerate, like, say, Viacom or Time Warner. In the same way that Viacom owns multiple cable channels that compete for viewers and Time-Warner owns multiple magazines that compete for readers, let rival Yahoo-vs.-MSN web sites continue to compete. In a broad sense, Yahoo reminds me a lot of Apple a decade ago. Good products, a large base of dedicated but restless users (many of them outright "fans"), and a staff full of talented engineers and product designers -- but lousy, visionless, ineffective management. What Yahoo needs is a Steve Jobs -- someone who will ruthlessly focus the company on products that are better, more popular, and more profitable.

Gruber makes a lot of good points; read the whole thing.

I think the real formula for success goes beyond Gruber's suggestions -- Microsoft needs to fuse the best elements of Yahoo's culture and technology with its own. That's going to be nearly impossible, though. What we have here is a hugely profitable and successful company acquiring a company that's financially in a downward spiral. No matter how many virtues Yahoo has, and no matter what Microsoft upper management says, Microsoft's middle management will be running things, and Microsoft's middle management's attitude toward the Yahoo newcomers will be: "We were successful before the merger, you Yahoos were a bunch of losers. Shut up, do what you're told, and be thankful you have a job." That's just human nature. Moreover, successful Yahoo managers and staff will be seen as threats by their Microsoft counterparts.

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