Microhooey!!

Thinking about Microsoft's proposed buyout of Yahoo.....

I've written previously about past tragic buyouts in the computer and Internet industry. In fact I'm hard pressed to think of even one acquisition that has served users, employees, stockholders or the industry well.

Innovation is inevitably killed in workforce reductions and assimilations. For some reason failed managers are placed in charge of the brilliant developers and marketeers that the acquiring parent had hoped to exploit. Of course the founders and top managers of the acquired companies usually take the money and run.

Creativity dies a slow and torturous death.

One of the worst examples I've previously cited was the purchase of MusicMatch (the mp3 music jukebox company) by Yahoo themselves. MusicMatch had created one of the most user friendly, platform friendly, and trouble free programs ever created. They had been rewarded with customer loyalty, industry awards and a rapidly growing market share.

Yahoo was struggling with a poorly written, buggy program rightfully ignored by most music afficionados and computer users. So, in 2004, Yahoo acquired MusicMatch for $160 million dollars. Makes sense, right?

Wrong. In a few short years they destroyed MusicMatch making it's successor program Yahoo Music one of the worst, buggiest, non-working programs in history. Yahoo's corporate bureaucracy at first ignored MusicMatch's programmers that they micro managed the innovation to death. Here's just one of thousands of blog and magazine articles on the debacle from WIRED MAGAZINE. Here's another one.

Everybody lost. Yahoo's investment was wasted. Users lost a great program. Employees lost their jobs, And innovation was smothered to death.

Yahoo has repeated this program dozens of times. If they've had a "successful" acquisition, I'm not aware of it.

In fact, Yahoo has so consistently wasted their resources that they have squandered their industry leading position and their mammoth stock price (and corporate value) so that Microsoft can acquire them for a mere song (pardon the pun), a tiny fraction of the value of the company just a few years ago.

But nobody has destroyed more companies and stifled more innovation than Microsoft. While 41 BILLION DOLLARS looks like a bargain today, when Microsoft's rigid bureaucracy chews up and spits out Yahoo, don't expect a dime's worth of value to be left.

The technology blogosphere is almost universally opposed to this acquisition. A great place to start reading is Farhad Manjoo's series of articles over at Salon.com.