Kara Swisher

Recent Posts by Kara Swisher

Yahoo’s Nightmare Scenario: I’m From Google and I’m Here to Help!

Here’s what a top-notch source at Yahoo joked to me tonight, after Microsoft walked away from its unsolicited takeover bid to acquire the long-troubled Internet giant.

“Google is now officially our best friend.”

Oh no.


Instantly, an image popped into my brain– that of the slithery Kaa singing “Trust in Me (The Python Song)” to Mowgli from the Disney classic animated film, “The Jungle Book.”

“Trust in me, just in me
Shut your eyes and trust in me
You can sleep safe and sound
Knowing I am around

Slip into silent slumber
Sail on a silver mist
Slowly and surely your senses
Will cease to resist

Trust in me, just in me
Shut your eyes and trust in me.”

You know what happens next, of course. A big squeeze, but not the good kind.

While Yahoo (YHOO) might not have wanted to be acquired by Microsoft (MSFT), its alternative to goose its revenues by relying on Google (GOOG) in an outsourced online search-ad deal is one it might regret even more if struck.

Why? Aside from the potential antitrust issues, which are distracting at the very least, it fundamentally puts one of Yahoo’s main businesses–search advertising–directly into the hands of the very company that killed off Yahoo’s chances of ever succeeding in the arena in the first place.

By its inability to innovate search–not exactly Google’s strong suit–and also not moving quickly enough after acquiring the once-superior technology from its Overture acquisition, Yahoo had perhaps already nailed itself into its own coffin.

But by now signing an outsourcing deal with Google, it will be saying that it cannot compete at all in the key arena of the Internet going forward.

AOL (TWX) did this kind of deal with Google and saw its search share dwindle, even though it collected Google’s payoffs. Now it is essentially a vassal state of Google, as its display businesses has weakened with the economy and its access business is to be cleaved off.

Speaking of pythons, Infectious Greed blogger Paul Kedrosky compared Yahoo to the crack suicide squad in Monty Python’s hysterical “Life of Brian.”

Still, Yahoo is putting lipstick on the pig.

In a statement today after news of the Microsoft pullout was revealed, Yahoo Chairman Roy Bostock asserted that Yahoo was “steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view.”

Those supposedly pleased shareholders will be hard to find Monday after the market opens and Yahoo shares hurtle downward.

Whether Yahoo’s management has the talent to pull the stock out of the basement remains to be seen, although Bostock added that Yahoo is “profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market.”

Actually, it is Google that is executing well and that has always been Yahoo’s problem. Now it must apparently turn that disadvantage into a virtue, while it is under enormous scrutiny from everyone and everywhere to perform.

And that kind of pressure could crush just about anything.

For a more amusing take on being squeezed, here’s a video–courtesy of Google’s copyright-infringing YouTube–of Kaa singing to Mowgli (which might soon seem very familiar to Yahoo CEO Jerry Yang):

And here is the video of the crack suicide squad from “Life of Brian”:

Please see this disclosure related to me and Google.