Daily Debrief, 2nd Edition: Yahoo and Google partner for ad deal Video

Daily Debrief, 2nd Edition: Yahoo and Google partner for ad deal Video Transcript

[ Music ] ^M00:00:02

>> I'm Kara Tsuboi, CNET News.com. Welcome to the second edition of the Daily Debrief. I'm joined by CNET writers Ina Fried and Stephen Shankland and between the two of them they cover Google, Microsoft and Yahoo of which we've got big news on all three companies today. Stephen, let's start with the Google-Yahoo ad deal that just came down this afternoon.

>> Yes, well this is something that the company has been working on putting together now for several months. Basically, Yahoo is under a lot of pressure to improve its financial results and there was a lot of back and forth with Microsoft whether it would happen that way. As a result of that, they came up with this pack with Google. So what's gonna happen is Yahoo is going to sell some Google ads on its Search results. They think it's gonna give them maybe up to $800 million of extra revenue in the first year, $250 million to $450 million of incremental cash flows. So it's a pretty significant deal for Yahoo. The flip side of that is it's a deal with their biggest rival, Google.

>> Who has 68% of the market share at this point, right?

>> Yeah, they're dominant in search and a few people will expect this deal is going to make them any less dominant.

>> Now, Microsoft is clearly not too pleased with this deal and of course, earlier news from Today means that they stepped out of the whole Yahoo situation, is that right Ina?

>> Right, I mean there are two things from Microsoft not to like. One, it wasn't able to get its own deal done with Yahoo and they started all these back in February by making their unsolicited bid. So I mean in essence, Microsoft by making a bid for Yahoo has now pushed Yahoo closer to its biggest rival in the company it was trying to take on, so that's obviously not good news. And then Microsoft has also said that any deal between Google and Yahoo from its perspective raises anti-trust issues. But the bigger issue here is, you know, where does Microsoft go from here?

>> And where -- what's the answer to that question?

>> Well, it's tough, I mean they wanna take on Google and where most of Google's money comes from is Search advertising and Microsoft now has no clear way of gaining share in that market. Yahoo is the company's biggest chance to gain scale and now that opportunity appears to be gone. So, you know Microsoft said, you know, we're gonna do our do-it-alone strategy, but they've been trying that for sometime and it hasn't been working.

>> But this is not a done deal, I mean of course as you said anti-trust issues, I mean there's about three-month waiting period to decide if this will indeed go through.

>> Yeah, well, Yahoo and Google say they're actually are not in the anti-trust issues, but there -- just because they're such a nice folks they're gonna give the Department of Justice three months to review it. That they say it's a commercial agreement, it doesn't require any regulatory approval, but they're gonna give the Feds a chance to take a look at it. You know, this has raised anti-trust concerns on Microsoft's part before and I can't imagine that there isn't gonna be at least some ruckus on that -- in that department.

>> Now over the last few days, for Yahoo some big names have announced their departures that sort of maybe indicates -- I don't know, weakening health of the company?

>> Well, yeah, I think it's certainly not as easy a place to work as it was and you know the dot com boom ten years or so ago when Yahoo was, you know in the catbird seat. It looks to me like a lot of these departures notably, Jeff Weiner who is the Executive Vice President of their network group. He runs a lot of very important products at Yahoo. It looks to me like a lot of these departures aren't so much a wholesale reorganization of the company to better align management and business units. It's more people are leaving and the company is adjusting itself to fill in the gaps.

>> So we've got a poll in the News.com starting now, who's the biggest winner?

>> I haven't seen it. Actually, the poll is who's the biggest loser?

>> Who's the biggest loser?

>> Wed decided to turn on the tide for once, we knew that pretty much everybody will probably vote for Google being the biggest winner and that's at the end of this interrelationship.

>> Of course. The results are still trickling in, but in your opinions, who is the biggest loser right now, Google, Yahoo, Microsoft -- Icahn?

>> I think Carl Icahn probably is not too happy or probably you know, unless he wants to become a long-term value shareholder, we'll see how that play goes.

>> Yeah, pretty evenly split between Icahn, Microsoft and Yahoo. I mean, I think, you know, Yahoo from Yang's perspective, you know, gets to stay independent. So perhaps, he's the big winner in all this. That said you know share holders have no easy way of getting the $33 that Microsoft was offering just a few months ago.

>> Thank you both, Ina Fried and Stephen Shankland and we will see you next time on the Daily Debrief. I'm Kara Tsuboi, CNET News.com. ^M00:04:27 [ Music ]