What happens if Microsoft acquires Yahoo?

Image: People look over displays at the Yahoo! booth.
People look over displays at the Yahoo booth during the Consumer Electronics Show in Las Vegas in January. Microsoft made an unsolicited takeover offer of $44.6 billion for Yahoo on Thursday.Steve Marcus / Reuters file
/ Source: msnbc.com

You’ve got a Yahoo e-mail account, and your best friend uses MSN. 

You use Yahoo Messenger and she uses MSN Messenger for instant messaging.

When it comes to search, you both use both Google, and sometimes Yahoo and MSN.

So, what could Microsoft’s acquisition of Yahoo mean in all these areas if the software giant acquires the Internet company? (Msnbc.com is a joint venture of Microsoft and NBC Universal.)

Keeping an e-mail address is probably the biggest issue for most consumers, and one that is likely to be left as is for awhile, with each brand staying in place, said Allen Weiner, research director for Gartner, Inc. market research.

“The issue is, particularly as Microsoft has moved people in their e-mail business around, from Hotmail (which Microsoft bought in 1998) to Live Mail, and created some confusion around that, they certainly don’t want to basically say,  ‘We’re all going to move you now to Yahoo mail,’ ” he said.

“The question is, how do they keep those brands in place, where appropriate, and then, where appropriate, do they bring those brands together?”

David Smith, lead Microsoft analyst for Gartner, said if Microsoft acquires Yahoo, there likely “would be ways to provide interoperability, to provide support, so that people don’t have to change” their e-mail addresses.

Representatives from Microsoft and Yahoo declined to expand Friday on what the impacts of the purchase could be for users.

In terms of instant messaging, there would be little change, Weiner said.

“The thing that some people may not remember is that Yahoo and Microsoft actually integrated their messengers quite awhile ago, so from an instant messsaging perspective, you can seamlessly IM people who are on those two different networks,” Weiner said.

It’s in the search arena — a lucrative one because of advertising revenue — that the biggest change may be ahead.

Google is the leader, with a 58.4 percent market share in the U.S., said Weiner.

Yahoo is next, with a 22.9 percent share, and Microsoft is third with a 9.8 percent share. America Online has 4.6 percent, and Ask.com 4.3 percent of the market, he said.

“The combination of Yahoo and Microsoft together is still only 32 percent,” Weiner said. “They’re still significantly behind Google.

“I look at this from Microsoft’s perspective. Microsoft has a mandate to try to take on Google in the world of search, and I think they got to the point where they realized they had two paths to go down.

“One was to take a large war chest of money, invest it in rebranding their own search product, call it something different, take on Google in terms of advertising and marketing, maybe invest in R&D. To date, the investments Microsoft has made in that realm haven’t really moved the meter.

“The second path is to take on the largest person above them, which is Yahoo. I think Microsoft believes it would be a far more efficient use of dollars to buy market share than to invest in their own product with an uncertain outcome.”

The resulting search product is likely to resemble Yahoo more than Microsoft, said Smith.

“I would expect to see a very strong reliance on the Yahoo brand, and things that are out there with the Yahoo name on it are likely to continue to be supported,” said Smith.

“When you look at the big picture of Web sites and places out there on the Web where there are groups of people that can be advertised to, whether it’s e-mail, IM, sports sites — Yahoo tends to show up in the top, or near the top, of most of those categories. They’re a very, very strong presence,” he said.

“That’s really what’s it all about, is getting the access to all the potential advertising there.”