Yang Says Microsoft Buyout Still ‘Not a Bad Idea’

“It’s been a pretty amazing year,” Yahoo CEO Jerry Yang said at the outset of an on-stage interview at the Web 2.0 Summit in San Francisco Nov. 5. Chalk one up for understatement.

During a repartee with conference chair and industry impresario John Battelle, Yang entertained the idea of another run at a sale to Microsoft, criticized the Justice Department’s view of its proposed ad deal with Google, and pitched Yahoo’s new ad-serving software as part of a “rewiring” of the company. “I don’t think that is a bad idea at all,” Yang said of the prospect of Microsoft buying Yahoo—“at the right price.”

Yang bemoaned his reputation as the executive who quashed Microsoft’s $33-per-share offer to buy the beleaguered Yahoo in May. Why didn’t the company accept the offer? “A lot of people have replayed that in their minds, and I’m no exception,” he said. But Yang said his critics didn’t recognize all of the stakeholders involved on Yahoo’s side, and said Microsoft “walked away” from the deal. “People who know me know I don’t have an ego” about staying independent, he said. “It’s hard to argue that I didn’t want to do something. I’m going to be labeled with that forever.”

Yahoo investors have been heartened lately by third-quarter earnings Oct. 21 that didn’t run off the rails. Yahoo shares closed Nov. 5 up 4% to $13.92. But they’re also waiting to see what comes next after a proposed deal that would have let Google place search-related ads on Yahoo Web pages fell apart Nov. 5. Google withdrew from the deal following opposition from the Justice Department and large advertisers to Google’s growing market power.

“The government in this case does not understand our industry. They have a definition of the marketplace that’s too narrow,” said Yang. “We were disappointed” that Google pulled out, he added—the deal could have provided better relevance for Yahoo’s users and advertisers. Yang noted he got a heads-up before Google announced its withdrawal. “These press releases don’t write themselves,” he said.

The top Yahoo argued that the company’s search efforts stretch past the parameters of that deal. “There’s an assumption that because we didn’t have the Google deal we weren’t doing a lot in search,” Yang said. Google held nearly 63% of U.S. search queries in September, according to market researcher ComScore. Yahoo held about 20%, and Microsoft 8.5%. Since last year, Google has gained query share, while Yahoo’s and Microsoft’s have ebbed.

Yang talked up the work Yahoo’s doing on its new ad-serving software, called Apt, which he said would let advertisers condense online purchasing. “That’s part of the problem right now: An advertiser has to go to 50 different sites to make a buy,” he said. Yang may be down, but he’s not giving in to his critics without a fight.

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