Yahoo! succumbs to the power of Google

The firm’s advertising tie-up wounds Microsoft but hurts its own future too, says John NaughtonTruly, you couldn’t make it up – unless perhaps you were a script consultant for a soap opera. Here’s the plot line so far: Microsoft, a successful but ageing computer company with a vast deposit account, decides it needs an attractive acquisition to enable it to keep up with the younger – Web 2.0 – generation. So it makes a generous offer to Yahoo!, a fashionable but faltering younger company. But Yahoo! doesn’t want to be ravaged by an older corporation and embarks on all kinds of crazy schemes to repulse its offer, including making overtures to Google, the new boy on the block.Microsoft is initially incredulous, then mad as hell, then conciliatory. But Yahoo! is implacably hostile, so Microsoft retreats to bide its time. This looks like a smart strategy, because Carl Icahn, American capitalism’s most awkward billionaire, spots an opportunity and starts buying up Yahoo! shares with the intention of unseating the board, installing his own stooges and selling the company to Microsoft.

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