Microsoft and Yahoo deal won't wash

SO, IT SEEMS that Microsoft and Yahoo are in merger talks. If they pull this one off then watch out for a ton of services duplication and resulting upheaval. Maybe that's why they call it Web 2.0: you just double up on products and see what gives.

Of course, Microsoft would like to have Yahoo for its advertising reach, especially in banner ads, and it would like some of Yahoo's superior properties such as Mail, Flickr and Answers.

Yahoo would surely be happy to sell at the right price, thus pacifying shareholders and management tired of regular drubbings at the hands of Google's knockout performance.

Finally, it would obviously make sense, as we said just a few hours ago, to put all of that competing R&D and infrastructure into one slightly bigger bag rather than two independently big bags.

But $50 billion for rolling up two internet companies? Come on, it's like HP and Compaq all over again, and at least Compaq had its services army to offer.

Adding the two searches together would still not provide a Google beater and the combination of two companies wouldn't have a better way to make money off ads. It would be a pure attempt to grab scale with no guarantee of keeping it afterwards.

It would also be a pain for users of the services that would lose out, potentially including long-running stuff like Hotmail.

Finally, it weould go against the grain for Microsoft, which has never pulled off a mega-merger yet.

Nope, this won't wash and I doubt the deal will come off. What Microsoft, Yahoo, eBay and Amazon need to is circle respective wagons against Google and hitch them together against the common enemy. One big merger won't do it. µ