Microsoft-Yahoo Merger Monopolizing

The talks of merger between two of the biggest IT companies have resurfaced and rumours have it that this could occur anytime now with activist investor Carl Icahn, who holds 5% stake in Yahoo, turning on the heat on the company. This has followed after MS’s unsuccessful attempt of a $47.5 billion hostile takeover two years back. Though the deal will be of much less value this time with the market capitalization of Yahoo hovering around $22 billion, the deal is expected to go through as it has found favour inside the Yahoo boardroom after the ouster of founder Jerry Young from the post of CEO.

Both the sides feel that the merger will be good for both and is necessary to leapfrog their competitors like Google. Icahn said in an interview with Reuters, “I’ve been a strong advocate of getting a search deal done with Microsoft. It would enhance value if a deal got done, because of the synergies involved.” The merger can be viewed as a desperate attempt by both companies to tackle the giant Google whose search and advertising business is doing wonders and has even shown it to be recession proof. Both companies haven’t been able to make any inroads in the search business with Google still holding 65% of the American market. Yahoo lags with 20% and MS in third with 8.4%.

Now perhaps it’s all rosy for the two companies but is it the same for the consumers as well? Today internet is indispensable for a majority of people with all the information and services available. But we should not forget that about 15 years back having even an e-mail account was a luxury. It was only after the launch of a revolutionary HoTMaiL that e-mail service was available for free. And it was only after the launch of Gmail that we got that unlimited space for our accounts. So the bottom-line is that all the developments that have taken place over the net are the results of fierce competition. And if we were to kill that competition inadvertently the development will also be killed and that would mean no revolutionary improvement for the users.

MSN Hotmail and Yahoo mail are two biggest providers of e-mail services with together accounting for over 500 million users. Gmail is at a distant third with just 91 million users. So the merger will make email sector a monopolized sector for the merged entity. And one can easily cite the example of Operating Systems to show what monopoly can do. Windows occupies a large majority here and other OSes are far behind. Just look at the quality of Windows Vista, any expert will tell you that it hasn’t made our computing experience any better. Unlike others, this merger will not really provide better services to users like Google Search but will instead be a forced one.

Competition has been the driving force behind providing better user experience over the net and will be for the times to come. The proposed wedding needs to be stalled. Anti-monopoly commissions of different countries ought to look into the matter and investigate. The merger is not to be stopped.

Pawan Gupta

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