Mike Arrington over a Techcrunch has a great article with his usual insider insight on the Microsoft-Yahoo merger. He believes that today will be the day for an announcement of sorts.

He’s also got some very relevant points about what might happen if Google got into bed with Yahoo. Go have a read!

So finally after months of speculation that this was coming (me too) Microsoft have bitten the bullet and written a letter (via Guardian) to the Yahoo board to show their intention to buy them.

It’s a handsome offer as well, $44.6B in cash and shares, that’s 62% up on Yahoo’s closing share price from yesterday. I guess this means MS are really serious, I’m sure they could have put in a lower bid but this bid should make it very difficult to turn down by Yahoo as it’s extremely attractive to their shareholders. I hope it’s the right play for MS sake, if it’s not and Yahoo really is slowly dying as many have said then they could be buying a very expensive load of traffic.

There’s a very brief response from Yahoo here

A conference call is being held at 8.30 EST in the U.S., should be more news after that. Techcrunch UK rightly mentions that a deal this big will see a great deal of scrutiny from Euro regulators (possibly putting Google/Doubleclick in the shade).

Will a deal like this produce a competitor for Google? Well maybe in terms of traffic and eyeballs but not in terms of search relevance, advertising technology, ad dollars earned, innovation or any of the other good things you can measure such companies on. This could get interesting!

A report (here via Marketing Charts) shows that ROI on search marketing has improved in the past year.

What is really interesting is the figures showing ROI improvements by search engine. Google has improved ROI by 7.5% (and it’s taken a whopping 76% of the total spend). Yahoo showed a 39% improvement in ROI returned to advertisers since the launch of Panama which is great news for them although coming at a difficult time. MSN interestingly shows the highest clickthrough rate and ROI, it’s ROI was 27% greater than the average across other engines.

Just shows why the money is still all in search at the moment. While returns like this are to be had it’s going to be tough for anyone to convince me that it’s worth moving money out of search into other areas.

Drag and drop; it’s a common piece of functionality that makes our lives on PC’s that little bit easier. Now, Yahoo has filed a patent for what it terms ‘smart drag and drop’. Yahoo’s claimed patent sounds pretty much like every piece of drag and drop functionality I’ve ever seen, I find it hard to believe that this will ever get through as it might give Yahoo enough ammo to claim others have copied it’s patent.

The Electronic Frontier Foundation are coordinating efforts to get this patent application denied, more details here.

The perennial rumour of Microsofts impending acquisition of Yahoo has resurfaced in an article in the NY Post today. I last posted on this in September. See the last line of this NY Post article for the hint supposedly from an insider at MS, apparently the deal is still being debated at Microsoft.

I’m actually less unconvinced than I was about this rumour now. Microsoft are still failing to build the traction around their MSN portal and get significantly less browse traffic than Yahoo and have significantly less advertising real estate available to them. They are also lagging behind in search (although that could change soon). Yahoo would still be a great buy for them, and instantly propel them up the charts in terms of eyeballs and ad clicks.

Yahoo has announced a new developer platform for their Yahoo Go mobile web service. The new platform is being set up to enable developers and publishers to mobilise their services quickly, at high quality and low cost, across hundreds of devices.

This is a very different approach to Google’s who are launching a whole mobile operating system (Android) with the help of many partners.

Yahoo’s system aims to build on the success of Yahoo Go and allow developers to tap into multiple phone manufacturers and carriers much more easily. It probably won’t have the flexibility to be able to create as sophisticated an application as you can on Android but it may well have the Facebook effect and allow developers to create simple apps with viral qualities which could prove very successful.

So Yahoo has settled the lawsuit with a number of Chinese dissidents who had filed a court case against them. The terms of settlement have not been disclosed.

The case had alleged that Yahoo had provided the Chinese government with information which helped them to prosecute the dissidents. No word on exactly what type of information Yahoo had handed over although one would suspect it could be search histories, email details, chat histories and possibly lists of websites visited.

So have they really breached the human rights of these dissidents? Well, the liberal in me thinks that they should never hand over any identifiable information to anyone else, I would be outraged if my details were misused in this way. But then, wouldn’t the same happen in the UK? If I broke a law then Yahoo would happily hand over my email if the government requested it.

I guess the difference in this case is that they are dissidents living under a restrictive regime. Therefore by handing over the information Yahoo have put these poor people in danger which is inexcusable morally. However, it is understandable from a business point of view, if Yahoo refused they would have risked being switched off in the largest populated country in the world which would have damaged their business considerably.

I would imagine it was a pretty tough choice for Yahoo and although they chose the route which to me personally is wrong morally for them it was probably the right decision.

For the first time the new darlings of the web (social networks) have overtaken the old darling (web based email) in the traffic stakes. Hitwise have a report showing the upward trend for the social networks and the rate at which they have caught up the likes of Hotmail, Gmail and Yahoo Mail.

So, are users now using social networks instead of email? Well yes they are , naturally, they are a quick way to converse with close friends especially to groups of friends. And they’re more fun to use, something email providers will have to address (OpenSocial and Gmail perhaps?). However, email still has it’s place and the demographic data from Hitwise shows that unsurprisingly it’s the younger users who visit social networks more.

One factor we should also consider is that email is something that you visit a few times a day maybe (unless the web is your life) where as users tend to browse social networks for long periods so the traffic is bound to be higher.

Less is more it would seem when it comes to search interfaces. Just look at Google to see the less-is-more approach at it’s best. Their minimal approach to the search homepage works really well, although I do think a big reason for that is that their algorithm is much better at returning relevant results with minimal input from the user.

Prof. John Maeda of MIT Media Lab had put together an interesting image showing the development of both Google and Yahoo’s homepage over time. It’s really interesting to see how Yahoo lost their way and Google stayed true to the minimal approach. Click the image below to see a full size version:

Compete.com have released some stats listing the top 50 website domains by unique visitors on their blog today. It makes for some interesting reading:
Yahoo is still the biggest domain in terms of unique users. Not surprising given their huge coverage, surely they have to come up with a way to make a success of all these eyeballs? They may lose out in search to Google but with such a vast web real estate finding a way to leverage that is key for them. Google however coming second is amazing considering their core is still search!

Facebook at number 21 is a bit of a surprise, I’d assumed they’d be higher given the buzz but perhaps they’ll position much higher next year (if their bubble doesn’t burst).

The growth figures in the blog post are most intersting, showing sites such as YouTube, Flickr and Digg as some of the biggest gainers (bigger even than Facebook). This certainly is the time of sharing content, something Facebook has yet to get right (they started off well but it’s lately disolved into MySpace’esque profile vanity).

Adult dating still a major growth area it would seem; the person who launches a Facebook for this domain will win big!

Of the losers, most intersting for me is the losses experienced by Expedia. This can only be down to the emergence of much better sites that give users more intuitive ways to search for flight & hotel availability. Online travel is much more competitive in that arena this year and with the move from tour operators to embrace dynamic packaging I can only see Expedia losing more eyeballs if they don’t make some significant functionality changes soon.

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