Xobni gets cold feet over Microsoft acquisition

Less than two weeks after it had agreed to be acquired by the Redmond giant, the small e-mail startup has walked away from the deal.

Negotiations had been ongoing between the two companies over the past few weeks, with an agreement reached in mid-April. Xobni distributes a plug-in for Outlook that shows how contacts are linked to one another.

The deal would have been worth about $20 million for the two-year-old company, which would have been a nice return on the $5 million in venture capital Xobni had raised from several sources.

Xobni has already begun work on a similar project for Yahoo Mail, which would offer similar features to the Outlook plug-in. In addition, it would also connect to the Xobni plug-in within Outlook to show how those contacts relate to the Yahoo contacts.

It appears, based on coverage by TechCrunch, that there was overall concern with how the product would fit into Microsoft's overall structure. While the Redmond company was asking for the Xobni team to move to Microsoft headquarters, it did not provide specifics as to what its future plans for the product were. It appears Xobni was concerned that the company's technology would become little more than another Outlook feature.