NEWS
The nitty-gritty of integration would have involved figuring out what to keep when the two companies had directly competing offerings. Yahoo!'s got the traffic, it's got the brand, and its services in general probably would have come out ahead.
Search would have been an obvious decision: keep Yahoo!'s search engine, redirect Microsoft search traffic to it, and get the combined engineering team cracking as soon as possible. It has more volume and more advertisers. The tricky part would be migrating advertisers to Yahoo!'s technology - but Microsoft would have a huge incentive to build as much critical mass as possible to try to check Google's dominance.
Yahoo! has another big asset: Yahoo! Open Strategy. Even in the real history, YOS is only just arriving now, but even a year ago, its potential was clear: it offers Yahoo! users more to do online, energising Yahoo! properties by linking them together with social activity and building them into the broader fabric of the internet.
Yahoo! took ages to retrofit its site with the Yahoo! Open Strategy technology, including interfaces that can broadcast user activity such as rating a movie; delaying YOS even more by mashing it up with Microsoft's online sites would have increased its risk of irrelevance.
With some big properties, a type of merger would be needed. With Yahoo! Messenger vs Windows Live Messenger, the companies already have done interoperability work, easing the pain of merging two largely incompatible networks into one.
Email would have been tricky. Each company already has two options - Microsoft's Exchange-Outlook combination for businesses and Hotmail for consumers, and Yahoo!'s Zimbra for businesses and Yahoo! Mail for consumers. Two email offerings already are too many, and four are far too many, but email is a core part of customers' lives, and it would have been hard to move gracefully.
So by this time in the companies' merger, users probably would see nothing different. But if Microsoft was smart, it would have determined that Yahoo! Mail had the better technological underpinnings, in part because of Yahoo! Open Strategy, and begun steering new sign-ups to it. Perhaps a migration tool would be released, or at least under way, for those who want to change manually.
With Yahoo! part of Microsoft, one big project would look very different: the cloud computing version of Microsoft Office, accessed via a browser. The combination of Microsoft's existing Office customer base and Yahoo!'s online customer base would have provided a much better rival to Google Docs, especially when it comes to attracting business customers who are more likely to actually pay for a reliable, supported service.
Not everything would have gone well for Yahoo! projects, though. The same scrutiny that Yahoo! properties are undergoing now, under the Bartz administration, would have begun months earlier. With new bean counters in charge, Yahoo! sites that didn't pass muster would have been axed with less hesitation.
And that cold calculation would likely have got colder because of the economy.
By the time the acquisition closed, signs of the economic troubles would be apparent. Microsoft shareholders, seeing their stake diluted and their cash reserves depleted by the acquisition could have become a significant issue. Microsoft's flexibility to acquire other companies, lavishly fund research with cash, or pursue other big-picture changes would have been significantly decreased.
Yahoo! employees, spooked by the bad economy and Google's continued dominance despite it, might have been happy about having a more stable employer and a better shot at taking on Google, cultural clashes notwithstanding. But the reality of layoffs would probably have swept away many feelings of security.
Yahoo! and Microsoft each announced significant cuts in the real world - 1,520 for Yahoo! and up to 5,000 for Microsoft - because of the economy. Combined with the inevitable redundancies from the merger, the job cuts probably would have come earlier for Microhoo and might well have been followed by more, increasing the total.
Worse, that unpleasantness would have taken place before any of the fruits of the integration were visible, deepening morale issues.
So by this time in our alternate history, there would be plenty of unpleasant news. Google wouldn't be put in its place, the benefits of the Microhoo merger wouldn't be apparent, and the world would look very similar to today's. But the seeds of the merger's fruit would be planted, and if Microsoft played its cards right, Google would be reckoning with a more formidable competitor.
