Microsoft and Yahoo: Can You Merge Philosophies?

Wednesday, February 20, 2008

On so many levels, Microsoft’s potential purchase of Yahoo is mind-boggling. The price tag alone, $44 billion, makes one’s head spin, not to mention the logic of how two also-rans to Google could combine to become number one. But what really got my attention was an article in the New York Times this past Monday by John Markoff and Matt Richtel (“Of All the Hurdles to a Merger, View on Technology Is the Highest”). In the article, Messrs. Markoff and Richtel point out that Microsoft and Yahoo have very different philosophies when it comes to software technology and have built their respective Internet data centers on very different platforms. As the authors point out, “while Microsoft has built its Web services largely using its proprietary tools like the .Net programming system, Yahoo has a well-known open-source culture.” For the non-techies in the audience, this is a wide gulf in philosophy that carries with it a fair amount of value judgments. Both companies have built their corporate identities on their software philosophies and I suspect have heaped their fair share of scorn on the other during their respective happy hours.

Add to this comments from an interview with Bill Gates on Wednesday of this week, as reported by Ina Fried on her blog, Beyond Binary. Mr. Gates points to Yahoo’s engineering talent as the big prize of the $44 billion purchase to help Microsoft build tools for advertisers, mobile, and video products as well as improve its core search algorithm. "The amount of computer science it is taking to do that is phenomenal," he said. "As you get more scale of engineering you can just pursue that agenda more rapidly. Yes, the advertisers and the number of end users is good, but we'd put the people and the engineering as the key thing." So its all those bright engineers that Microsoft really covets. It sounds like the Yahoo servers are headed to the recycling bin.

Just with those two things in mind, think of the cultural hurdles still to come. For instance, you are a Yahoo engineer who works there because it has, and values, open-source software. Here comes your own version of Darth Vader in the form of Microsoft to take over your world. So you start looking around for more hospitable surroundings, some place more in line with your technical values. But that is the last thing Microsoft wants to see happen. It wants you to stay. “But you’ll need to think like us,” comes the message. “And welcome to our inner sanctum of proprietary software. Together we will destroy Google.”

This is going to be some twisted marriage.