Steve, I've heard you're making a tough decision about Yahoo. I know what you should do. It's time to step back and walk away. Yahoo's not worth the trouble. If you force an acquisition, your legacy will be mud not Mesh.
There are more ways to Google than through Yahoo. Why blast through the mountain, when you can climb over it?
Maybe the aQuantive acquisition put blinders on some of your executives' eyes. The ad company is boosting your advertising revenues, bringing in new clients and changing how you engage existing and potential customers. But aQuantive was a successful courtship. Yahoo is a shotgun wedding. Yahoo is never going to love you, Steve. She's a modern, independent woman. If you get her, she will hurt you. Microsoft will never recover from a Yahoo merger.
Steve, if the stress doesn't kill you, Yahoo will turn you into a real Monkey Boy, but shrilling in despair. Maybe a merger would work better if Yahoo wasn't so unwilling. Her dowry is enormous. You'll have to borrow money to get her, create debt Microsoft hasn't seen in years. Do you really want to borrow $10 billion or more for her?
Financial stress breaks marriages; likewise, companies. Yahoo doesn't want you. Deal with it. Move on. Don't take her by force. It will kill you and set back Microsoft. The $6 billion paid for aQuantive will pay back because it was a willing union. You'll have to show Yahoo CEO Jerry Yang the door—and boot him out it.
You don't need to be No. 2 in search or get hold of Yahoo's data centers to take on Google. You'll pay too much in pain and stress—distractions that will later call your judgment and that of your top executives into question. Haven't you taken enough of a beating for Windows Vista? Bloggers and journalists will burn you—not your image but you—in effigy if Yahoo is taken by force and later drags down Microsoft.
The next Google, the next Microsoft is a bright idea in the head of some Stanford University student. You've got to find him or her first. But that student will get away if you get caught up in acquiring Yahoo. He or she will go to a Web 2.0 startup, or, worse, to Google.
Who will you hire during a massive integration process? Better stated: Who will want to be recruited by Microsoft? You can lie to yourself and say that Yahoo's integration will affect only parts of the organization. Don't live in denial, Steve. Yahoo will affect all of Microsoft. The merger will sap morale and be an even bigger distraction than the Justice Department antitrust case. There will be division within Microsoft about future objectives versus existing revenue streams. People will worry about their jobs, about performance expectations and what executives they should align with. I promise you, Steve, the post-Yahoo power struggle will divide Microsoft, leaving Google free to push harder and faster; laughing all the way. Microsoft will become a company less willing to take risks.
Meanwhile that bright idea will go elsewhere, and some of your best people will flee the stinky integration for sweeter places.
Frankly, you and Bill Gates made a big mistake nearly a decade ago. You should have voluntarily broken up Microsoft—taken the Justice Department's plan as a cue. If Microsoft had voluntarily divided into three or four companies, shareholders would have received huge value, the stock price would be higher, you wouldn't be constrained by the Justice Department or European Union and you would have no Google problem today. Microsoft could have divided itself and conquered. Instead, your company's size, inability to respond in Internet time, and dependence on Office and Windows revenues make moving the Titanic easier than steering Microsoft. And now you want to make Microsoft bigger?
There are no viable breakup options now. The amount of technological, sales and channel integration makes a voluntary breakup too difficult. But that doesn't mean you can't start fresh, Steve. For a fraction of the Yahoo merger's expected cost, you could create funded startups within Microsoft. Why not start 100 incubation projects, with $10 million in startup capital and put them outside the Microsoft campus. Give your brightest people a chance to do something spectacular. Remove them from the management bureaucracy. Have these startups report to someone directly in your office and then to you.