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Google Buying Yahoo: Thoughts and Theories

Annie Wakefield
Digital Marketing Manager
31 October 2011

Last week news hit from the Wall Street Journal publishing that Google were in talks with private equity firms in buying Yahoo’s core business. With the news spreading like wild fire, many speculators are wandering how Google could possibly benefit from this?

When I first heard about this I came about it from an SEO perspective (as you would imagine!), it would be ridiculous that Google are there for Yahoo’s search engine, since that is powered by Bing, but hey you knew that right?

Thoughts and Theories

So there have been lots of debates and theories as to why Google are suddenly interested over the past week, here are the top 3:

Number 1: It’s all about the money, money, money

In terms of favourite search engines at the moment, it’s a no brainer Google are number 1, but in the display-ad market, that is a whole different kettle of fish. Google logo with lots of money

Google are a small[er] player, compared to Facebook who are expected to generate more than $2 billion in net revenue from display advertising this year; Yahoo forecasted $1.6 billion and Google are estimated to generate in the regions of $1.1 billion.

What this means is that if Google acquire Yahoo they will be able to increase their net revenue to the regions of $2.5 billion, making them bigger players in the market.

Number 2: Making Bigger Circles

Even with Google+ having one of the largest uptakes in social media history they are still predominantly a small player compared to Facebook.  To date, analysts speculate that Google+ have reached around 40 million users, Google+ circles whereas Facebook have reported to have 800 million active users.

Google aim to get more active users to their side, and using Yahoo as a platform, could prove to be a big opportunity to integrate both networks, with Yahoo getting 700 million hits a month, there is great potential there.

Number 3: Back to China for Round 2

Google closed down their operations in China last year, with the main reason being that they were not able to compete with Baidu. Google in China If Google were to acquire Yahoo, this would give them a quick foot back into the market via Yahoo’s assets in China and because of Alibaba’s 40% share in the business.

This would make it safe to say Google will be able to return to the Chinese market and eliminate the possibility of Alibaba’s acquisition of Yahoo, and re-plan for search engine dominance in China.

Latest update

Since Google have made public their interests in Yahoo, many other parties have sparked their interests, most notably Microsoft and Alibaba shown below:

Picture of companies interested in Yahoo

In the meantime I suggest to keep your eyes peeled as this will cause quite a stir and make history in months to come!

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