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So I read a blog post by Jeremy (ShoeMoney.com) about how Microsoft might buy Yahoo in 2007 and all the reasons why. I enjoyed it so much I figured I’d post a commentary on his points. So here you go:

1. The search algorithm… duh… Microsoft’s horrid search algo is by far the single biggest problem that Microsoft has right now. The problem is that when there are no users using the search engine then there are a ton of ads that never are shown. If Microsoft were to acquire Yahoos search algorithm this would be a GIANT step in getting users back.

I wouldn’t go as far to say that no one uses MSN, it’s popular in a lot of places outside the US (more so than yahoo) and inside the US, it’s got a decent market share. However, it does suck (no argument there) and Microsoft could do a lot better with Yahoo’s algorithm and technologies.

2. Overture Yahoo Search Marketing. Microsoft used to broker every thing through the company formally known as Overture for showing ads on msn.com search. They are now trying their own company but its chugging along at a very slow pace. Most advertisers like Microsofts Adcenter but agree there is just not enough volume from its search engine (see #1).

Microsoft Adcenter seems to be ok from the comments that users have been leaving, but I think Microsoft is rolling it out slow to prevent a disaster like…hmmm, Vista? Regardless of how quickly it hits the market, it won’t beat Adsense of YPN, so points to yahoo here.

3. Yahoo Publisher Network - YPN IMO is the best contextual advertising network there is. They have a great quality control team and also a REAL PHONE NUMBER THAT REAL PEOPLE ANSWER if you have contextual questions. Nobody provides the level of customer support in regards to contextual advertising that Yahoo Publisher Network does.

This would be HUGE for Microsoft, an instant jump on Adsense.

4. Flikr - Again Microsoft may have a similar product but the volume is here. Boom another zillion people to market to.

Microsoft’s products aren’t considered to be “sheek” and “trendy” like Yahoo’s are. They could do well to acquire some “name brand” Web 2.0 property.

5. del.icio.us - While Google is signing up or buying all the 2.0 advertising space Microsoft can acquire a huge name right here.

I’ve never been a fan of del.icio.us, but I see it’s value. Microsoft has so many venues where it could implement this; although, it clashes with Windows Live a bit.

6. The People - Microsoft has tons of stale old people who do not understand this new industry. They are starting to just now contribute to rival open source projects like Zend and Mysql. Acquiring Yahoo people like Jeremy Zawodny (who wrote a book on Mysql and also contributed tools to the project). Microsoft realizes that they are not only losing ground in the search industry fast but they also lost market share in server technology to Zend (PHP) and other open source products. If they want to keep their market share with Windows Server I think bringing in a lot of these brilliant Yahoo developers would keep them on the right track in making sure they integrate well with the open source items.

This is very true, Microsoft needs to “get with the times”, and by “times” I mean open source, community shared and web 2.0

7. Video - Between Yahoo Video and Microsoft’s Soapbox They might be able to combine for a decent share of the video market. Why is the video market important - 2 words - video advertising. I took part in the beta test when Google did a trial run of video ads and then 2 months later they buy out youtube… ya… video advertising. Ad Volume ++

I don’t neither Yahoo or Microsoft’s video products are going anywhere anytime soon. Google completely nabbed the market, it will be difficult for anyone to compete in it now.

8. Community properties - Yahoo has yahoo groups whose numbers rival Myspace. Never heard of groups.yahoo.com ? Ohh yea you forgot about that huh? Instantly you have millions of people to show more ads to! Ad Volume++

MSN Groups is very very big as well; however, I get the feeling that this would only work if they implemented everything nicely, and that’s not something that Microsoft does “well”.

9. Business Directory - Microsoft Just gave up there Business Directory efforts. Yahoo has always rocked it with their paid inclusion directory. Its by far the most respected business directory on the internet. Even at 300$ per year fee webmasters line up all day to submit there websites. Mean while Google’s Business directory is a laughing stock being powered by the corrupt DMOZ.

The directory stuff is a bit debatable. Who goes through it now a days anyway?

10. Yahoo Just cleaned house. It seems to me this makes a merger that much easier with less chiefs to merge.

I’m not sure this matters, if Microsoft acquired Yahoo, many many people would be fired regardless. There’s too many points of overlapping. But then again, now there’s less people to fire…

Overall, I doubt this will happen this year, but it’s a possibility. I have to say, Jeremy makes some nice points here and I’d like to see this pan out. Maybe it’d make Google do even cooler things…

We shall see.