SUNNYVALE, Calif. — The increased jockeying for Yahoo complicates the Web portal’s takeover fight with Microsoft. But it also simplifies the bigger picture: The five largest draws for the Internet audience are now virtually certain to shrink to four — maybe even three.
The latest sign of the Web industry’s maturation, Microsoft’s unsolicited bid for Yahoo probably will result in less choice for advertisers and reduce competition for e-mail, Web search and other online services, analysts and consumer advocates said.
“I assume we’re going to be losing at least one search engine,” said Leslie Harris, president of the nonprofit Center for Democracy and Technology. “We’re going to have a lot of power consolidated in a lot fewer places.”
Although Yahoo wants to remain independent, Microsoft’s overtures have forced it to seek a merger with Time Warner’s AOL and a search-advertising deal with Google. Similar logic is fueling the deal-making ambitions of AOL, Rupert Murdoch’s News Corp. and Microsoft, executives said Thursday.
Time Warner is trying to find a buyer for AOL. And News Corp. is hoping to locate a partner for its MySpace social-networking site from Yahoo’s predicament: The media giant is talking with Yahoo about helping it avoid Microsoft and with Microsoft about helping it swallow Yahoo, according to people familiar with the talks.
“You get too many players selling too many wares, and they compete on price, and you end up consolidating,” Sanford C. Bernstein analyst Charles Di Bona said. “So much for the Internet being completely different from everything else.”
The blur of new arrivals at the ball are encouraging a range of what-if scenarios.
Yahoo is in talks to absorb AOL, with parent Time Warner taking a stake of about 18 percent in Yahoo, according to people familiar with the talks. Yahoo then wants to outsource much of its search- based advertising to Google to boost profits. But many expect Microsoft to offer more — with or without help from News Corp.
