The news has been whizzing by all day. Microsoft and Yahoo are courting again. No they are not, yes they are... ad nauseum.
Why should they get together? Because they will be bigger than Google and therefore they can do better at acquiring all the neat little companies that Google keeps gobbling up, while Yahoo and Mixrosoft are back in their offices discussing and analyzing and writing memos to their superiors.
Why should they not merge? because it is a really lame idea that will benefit no one but the legal and finance guys who will milk money and agility out of these two cows while Google runs circles around them.
I doubt there has been a single case of Google beating Microsoft, who I believe is still bigger with more cash than Google or Microsoft. I do know for certain, that the graveyards are filled with large companies with entrenched cultured that have merged only to perish. In fact, the only time it may have worked was HP who bought Compaq who, at the time, was choking to death trying to digest DEC.
Google wins with startups in part because they are perceived as a cooler company and in much bigger part because they have both the focus and ability to execute quickly when they want to. If their closest two competitors tried to merge, Yahoo and Microsoft would be paralyzed for years, if not forever. And during that time, Google would hardly look over its shoulder as it pulled further away. It would just keep its eye on the best and brightest little companies around.
Yahoo and Microsoft have been around enough blocks to know size is not the only thing that matters.
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