What a Microsoft – Yahoo! merger would mean for innovation, technology entrepreneurs, and start-ups
SmartCompany have just published an article based on an interview with me, titled What a Microsoft and Yahoo merger means for entrepreneurs.
The full article is worth a read – below are the direct quotes from me.
There will be fewer exits but more start ups for entrepreneurs in the digital world if the proposed Microsoft takeover of Yahoo goes ahead, says technology futurist Ross Dawson.
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If the deal gets through the competition regulators, it could substantially change the acquisition landscape for technology entrepreneurs, says Dawson. “Yahoo has said that it intends to buy 50 companies a year; if Microsoft buys Yahoo, that will change.
“While Microsoft has been buying start-ups, [the deal] signals a shift in its strategy and it will focus on digestion of Yahoo.”
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“While Microsoft is preoccupied, there could be increasing opportunities for start-ups to carve opportunities by being innovators – although it is hard to see how they might exit [at this stage],” says Dawson.
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Dawson says there are two areas where Microsoft would get a “critical mass” from a merger with Yahoo – free email hosting and instant messaging. “I don’t see either will lead to reduction of competition. Both of those are free services.”
I wrote last year about the shift of the tech acquisition landscape over this decade from IPOs to trade sales. Now the ambition of most tech entrepreneurs is not to go public, but to be bought by a large company. Microsoft, Yahoo!, and Google have each accounted for substantial activity in the space, with Yahoo! having made an explicit internal goal of acquiring 50 companies this year, and Google with similar intentions. Most of the large media firms have been busy acquiring, recognizing that their shift from traditional to online media is unlikely to be successful through internal initiatives alone. Telecoms firms, enterprise software companies and other well-capitalized firms in adjacent spaces have all been acquirers, providing exits for growing companies.
While Microsoft and Yahoo! merging, or even being caught up in what would be at best a drawn-out acquisition process, buyers are being taken out of the market. Yet the other side of this is that new pockets of opportunity emerge where entrepreneurs can create new social media sites – in the broadest sense – that are complementary to what large companies can do well, and thus potentially make the space more dynamic.
Not surprisingly, Google has expressed its opposition to the mooted take-over, and has approached Yahoo! to see if can help create alternatives to an outright acquisition by Microsoft, as I discussed on Saturday. It claims that the acquisition could result in less innovation in the market. There is a good case to be made for that, however I actually think that the innovation landscape at the lower-end could well be bolstered by consolidation by big players. It’s a critical issue to examine as the deal unfolds.
[UPDATE:] Marc Andreessen seems to largely agree with my points, and has some other great insights, including a list of some of the companies that have been active in acquiring Internet businesses.
