• Silicon Alley Insider, Monday, February 4, 2008 11:45 AM

Silicon Alley Insider's Henry Blodget offers three reasons why he thinks a Microsoft-Yahoo union would be a disaster. For starters, he says the deal--though it would eventually pass--would come under at least a year's worth of regulatory scrutiny in the U.S. and EU, as Google returns the lobbying favor Microsoft paid the search giant last year in opposing its proposed acquisition of DoubleClick. Prior to this, Yahoo, will be bombarded with other offers (a potential Google partnership is in the works, for example), further delaying the long integration process even further.

The second big problem is that Microsoft's money-losing Internet business plays second fiddle to just about everything else it does, like Windows and Office. And while Google invests in "cloud computing" to kill off Microsoft's top moneymakers, Microsoft plans to use the Internet to protect those two businesses.

Which is to say that Google's is a forward thinking strategy, while Microsoft wants to protect the status quo. "At Microsoft, every exciting new idea that undermines Microsoft's core business will be killed (or, at least, delayed)," says Blodget, which means the inattentive software giant would most likely squander the opportunity presented by Yahoo's massive audience and content properties.

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