Yahoo employees could come home to Microsoft, leaving assets behind

The man who would most likely lead Yahoo after a Microsoft acquisition, should that take place, wrote an FAQ on Friday ostensibly directed at his own employees, but actually -- and quite obviously -- meant to appease Yahoo's.

"The industry needs a more compelling alternative in search and online advertising," wrote Microsoft Platforms and Services Division President Kevin Johnson, in a memo directed to his own staff but publicly released by Microsoft over the weekend.

"I have personally met with top executives of the major media companies, and I know there is a desire for more competition in search and online advertising," Johnson continued. "Without this, there's less innovation, less competition, and less value being generated for consumers, advertisers, and publishers. Together, Microsoft and Yahoo would have an opportunity to change and evolve the experiences and value we deliver to all of these groups."

Like one of those TV commercials set up to look like an interview, where the speaker looks to one side of the camera rather than right at it, Johnson's memo reiterates the key message put forth by CEO Steve Ballmer and other Microsoft execs on February 1: An acquisition of Yahoo would be done in the interest of absorbing its talent, though its assets are a somewhat lesser priority.

"Services we've acquired over the years have been based on both Windows and open source technologies," Johnson wrote, alluding to the fact that Yahoo isn't necessarily a Windows-centric development house like Microsoft, and paving the way for a future excuse to divest.

"Although Windows is our strategic platform and in some cases the teams ultimately migrated their products to Windows for a variety of reasons, in other cases we have prioritized continuity and have used open interoperability mechanisms to achieve effective systems integration," he went on. "Yahoo has made significant investments in both its skills and technologies, so we would work closely with Yahoo engineers to make pragmatic platform and integration methodology decisions as appropriate, prioritizing above all how those decisions would impact customers."

Multiple press sources this morning continue to cite Center for Digital Democracy Executive Director Jeff Chester's blog post two weeks ago, warning that Yahoo already operated a huge behavioral ad targeting platform in the form of Blue Lithium, which Yahoo acquired last July. It's that platform which Microsoft truly wants to absorb, Chester believed.

But that post came well before Johnson's memo last Friday, not in response to it as press sourced indicated. And in that memo, Johnson clearly implies Microsoft doesn't really care what happens to any of Yahoo's prior acquisitions. In the end, it's the single ad platform that Microsoft's customers currently want, he wrote, not multiples -- and Microsoft believes it will be the one building that platform, not Yahoo and not any of its acquired divisions.

"By combining search and non-search advertising inventory on a single ad platform, yield is also improved," Johnson stated. "The other benefits and opportunities may include improving return on investment and decreasing the cost and complexity of running multiple campaigns. We also believe in an extensible ad platform. From my discussions with top advertising agency executives, they share this belief and want to play a key role in extending this ad platform for incremental value to advertisers."

Later, Johnson proposed a simple formula for the combination: Microsoft's existing platform and culture, plus Yahoo's talent and expertise -- not its assets -- yielding a blended company that will look more like Microsoft after it's all over.

"We would have an opportunity to bring together the best of both companies - Microsoft's culture of innovation, and long-term commitment to tough R&D problems, with Yahoo's blend of Web-centric DNA and innovative engineering, 21st century media expertise, and advertising talent."

Both talent pools would get together, Johnson continued, to decide which of Yahoo's various brands would remain with the combined company. "Yahoo" itself would obviously be one of them, and Yahoo's employees would remain headquartered in Sunnyvale. Johnson referred to all of Yahoo's employees as a singular entity, though he did acknowledge there would be "overlap," as with any merger. He did appear to show favoritism toward the engineering side of Yahoo as opposed to the executive side, where one would gather overlap would be at its greatest.

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