Yahoo’s in trouble - at this point, everyone knows that. Throughout this entire year, they’ve been playing a mating game with all of the top search engines (Microsoft, Google and now AOL). They first were in some talks with Microsoft that kept falling through. With Google, they seemed to have a fairly finalized deal to serve Google ads on their network which was estimated to bring in an extra $250-400 million in revenue for Yahoo, however, the deal seems to be dead in the water due to government intervention. Now, there is word that Yahoo and AOL execs are talking with each other about a possible deal between the two companies.
An AOL/Yahoo deal could be the push Yahoo needs to become a truly competitive force, but a merger alone would only mend some of their problems for the short term. A deal could give Yahoo additional traffic that is better quality than many of their current partners and would also be taking some traffic away from Google that would help bring the two market share percentages at least a little bit closer together. However, both AOL and Yahoo have been losing users over the last few years and while a deal would give Yahoo a short term boost, there would still need more to be done for Yahoo to get completely back on its feet.
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