Internet moguls in deals, mergers speculation

Stan Beer
Wednesday, 24 May 2006 12:04

Your IT - Home IT

The past few weeks have witnessed increasing speculation about deals, mergers and acquisitions involving many of the biggest names and most trafficked sites in the internet space. Early on, it was rumours of Microsoft buying Yahoo or just Yahoo's search business. Now that one has been put to bed by Yahoo CEO Terry Semel, fresh speculation has emerged about both a merger and a massive search deal.

The first rumour that appears to be doing the rounds among analysts is that online trading portal eBay may be in line for some sort of alliance with Yahoo. Whether that be a deal or a partnership agreement, it makes more sense for Yahoo than becoming part of Microsoft. Both sites have equally high profile brands and businesses that are complementary and synergistic.

Yahoo and eBay are the two leading marketplaces on the net. Yahoo, the most visited site on the web, is the leading marketplace of news and information content, as well as having the leading web-based email product. EBay, ranked number 9 in internet traffic, is the leading marketplace for products, and also owns Skype and PayPal, themselves very strong online brands with strong user bases.

In the instant messaging and internet telephony area, the fast growing Skype, which has more than 100 million users and growing fast would instantly propel Yahoo into the major league of online voice and messaging communications, nicely complementing its strength in email.

For eBay, a merger with Yahoo would greatly reduce, if not entirely eliminate its dependence on Google referrals as a source of traffic. Such an alliance would indeed result in a formidable online presence. So far, however, it's all just speculation and analyst musings.

The other big deal that looks like it could very easily go down sooner rather than later is a search engine deal between News Corp's social networking site MySpace and one of the major search engines. MySpace, which has more than 80 million registered users and growing fast, is a veritable magnet for young internet goers.

Search engines, like Microsoft and Google, would be literally licking their chops at the prospect of having direct access to a growing captive audience approaching 100 million young consumers through an exclusive search box on the MySpace site. On the other hand, Rupert Murdoch, who has reportedly vowed to monetise the site his company paid US$580 million for in 2005, recognises that search advertising will play a big part in the ongoing revenue derived from visitors.

The MySpace deal is one that is bound to happen sooner rather than later. The only question is whether Google or Microsoft will get the nod. Microsoft, which desperately wants to gain traction in search will be going in especially hard. However, the question for News is which search engine will gel better with the young MySpace visitors and thus be the greater revenue spinner in the long run. Right now, Google is the obvious choice.