Icahn has been talking with Microsoft.  Both sides have agreed to issue statements (here and here) that if the Yahoo board is fired, Microsoft might offer another bid to purchase Yahoo.

This is easily translated, of course.  It is estimated that Icahn paid ~$25 for his shares and he doesn’t want to lose the money he’s already lost.  Icahn tried to get a Microsoft transaction going in May.  Icahn disastrously failed.  Now he’s looking for Yahoo shareholders to bail him out.

Yahoo is in a tough spot already.  Electing the Icahn board means that you’ve got Yahoo in the same tough spot it’s already in, plus a board that has publicly said it has no intention to do anything with the company other than sell to Microsoft.  This is a horrible negotiating position.

Microsoft could walk in and buy what is left for far less than $20/share.  Fortunately for Yahoo shareholders, I don’t think Microsoft would do this.  Out of “good will” and the interest of avoiding competing bids, they’d offer more.  But if you were an employee at Yahoo, and this all happens, what are you going to do?  You’re either going to quit (because the management team has publicly stated doesn’t care if you succeed or fail - they just want to use you to sell to Microsoft), or you’re going to stick around to see if you don’t get that bonus along with your pink slip.

Either way this is a bad deal for Microsoft (they pick up a bunch of assets with a completely uninspired and burned out team) and its a relatively bad deal for Yahoo shareholders.  They sell out for far less than they were worth just 6 months ago, and if Microsoft really wanted to be brutal, they could end up selling for a small fraction of what they are worth right now.

The only winner:  Carl Icahn - the businessman that builds nothing, takes everything, and doesn’t care about people -who makes a few extra short-term dollars per share for himself.

In the Viacom vs Google lawsuit, a judge has ordered that Google turn over a set of information which borders on personally identifiable information.  Although Viacom and the lawyers are supposed to keep all this data private, there is obviously new opportunity for this information to be leaked, abused, or used for other purposes.  It is unclear yet  whether Viacom will get IP addresses in the log data.  If they do, some users will be personally identifiable.  Although Viacom isn’t supposed to use this data to identify end users, they will now know whether or not other lawsuits could bear fruit (a.k.a. make money) for them.  If you think they won’t be coming after individuals, you’re wrong.  It’s just a matter of the right lawyer with enough data to know what to subpoena.  And even if the US Courts don’t allow Viacom access to this data, what happens when French Courts (or any other country) order that Google hand over the records? 

It doesn’t matter if you trust Microsoft, Google, or Yahoo.  The fact is that you cannot trust every government and every lawyer across the planet.  At the same time you have to expect that any international company will obey the law in the countries in which they operate.  This means the companies are going to hand over the data - it’s the law.  Even if this means handing over personally identifiable information to China so that they can execute dissenters, you have to expect the companies to do this.  Do you really expect *them* to break the law?

There is only one way to play this game, which is to NOT retain records of any kind.  If records are not kept, they obviously cannot be subpoenaed.

Personally, I do trust Google, Yahoo, and Microsoft.  I just don’t trust every lawyer on the planet.  And it only takes one lawyer to make my life a mess.  For this reason, I urge Google, Yahoo, Microsoft and all other internet companies to not keep logs.  I know it helps their businesses, but retaining these records makes it downright scary for me to use their services.  Get rid of the data, get rid of the problem.

Of course, these views do not necessarily reflect those of my employer.

See also:  Internet Trust - Present and Future

Scoble writes this week about how Microsoft’s plan to challenge Google is to use it’s 320 million “anti-Google weapons” - in other words, the 320 million users of MSN services.  When did users become weapons?

Due to anti-trust arrangements, of course, Microsoft can’t easily “leverage” it’s Windows users or its Office users.  However, MSN users are fair game because Microsoft doesn’t have a monopoly there.

But all of this gets to a meta point - doesn’t it suck to be used as a pawn for Microsoft, Google, Yahoo, or anyone?

Unfortunately, this is an arms race which only gets worse as desperation mounts.  Users don’t want the installation of one product to reconfigure their preferences for another.  However, this is exactly what  Microsoft does today - install *any* MSN product,  and if you aren’t careful, it switches all your search settings to Microsoft’s search.  In the future, if they get more desperate, I’m certain they’ll stop bothering to ask, and instead claim it is a requirement as part of the “terms of service”.

This is wrong; and every company is guilty of it.  I do believe the more desperate companies are generally the aggressors.   Once started, however, it becomes an arms race where each company must respond before the other company uninstalls them!  This is wrong. 

I want a 3rd party utility that doesn’t pimp its wares on me but which knows about the arms race for media players, default browser, default search, etc etc and neutralizes these marketing tactics which think of me as a “weapon” against the competition.

I just discovered the Google Chart API.  If you’ve ever built an application that needed to generate charts, you may have spent a lot of developer resources on it.  The Chart API is pretty awesome - charts for free….

Working under the veil of “shareholder crusader”, Carl Icahn is currently on course to single-handedly destroy two tech giants and leave a third as an unwanted monopoly.

As you can tell, I’m not too happy with Icahn today.   This is a man who does not understand the search or advertising businesses at all.  As part of his smear campaign against Yang yesterday, Icahn was a babbling idiot as he discussed why Microsoft should buy Yahoo.  Basically he reiterated the same ignorant mantra - “the only way that Microsoft can compete with Google is to have Yahoo”.   There is no basis for this, and a whole lot of indicators that it is just untrue.  Most notable is that the only search market share shrinking more rapidly than Microsoft’s is Yahoo’s.

Icahn is a great businessman.  He can spot a company that could be sold for a short-term dollar.  But, he doesn’t know how to build products and never has.  Icahn’s history shows that he has NEVER built a product.  How is it that he knows anything about building a competing search engine to Google?   Where does he get these claims?   In fact, much more knowledgeable industry experts believe he is 100% wrong.

Icahn is not working in the interest of Yahoo shareholders.  Icahn just wants to make a buck.  Remember, he can sell yahoo for $26, make $1/share, and put $50 million back in his pocket.  He’d then blame Yang and Yahoo for having not sold for more.  Well, he knew that Yang had rejected the Microsoft deal before he invested!  At this point, his complaining about Yang or the Yahoo poison pill is pure posturing for him to make money.  (Has he talked to Yahoo employees?  Maybe he doesn’t know that they only reason they didn’t quit already was *because* of that retention plan?)

Unfortunately, Icahn may have already ruined Yahoo’s chances for short-term recovery.  If he is successful, he will also ruin Microsoft’s.  If the acquisition goes through, the most likely outcome is this:  Yahoo and Microsoft will both lose search marketshare during the 1yr transition.  Google will emerge as the unquestionable and unwanted monopoly.  Consumer choice in search will drop to dangerously few choices.  Advertisers will have no online choices.  Microsoft shareholders will be left having paid $40B to acquire an asset which was only worth $20B.  Nice.

I hope Microsoft comes out with a public statement, “we won’t purchase Yahoo at any price”.  This would clearly tell the industry, Microsoft employees and Yahoo employees to stop being distracted by Carl Icahn’s selfish antics.  Instead, we could all get back to work so that Microsoft/Yahoo could figure out how to gain market share against Google, and in the end, have 3 healthy, strong companies in the search/advertising markets.  Nobody wants a monopoly - not even Google.  Don’t let Icahn create one.

Don’t believe a word Icahn says.  He doesn’t know how to build companies or products.  He only knows how to make money while dismantling them.

Microsoft and Yahoo aren’t making money on this acquisition, nor are the bankers, nor are the people that I advised to buy YHOO stock.  But, I’ll bet there is a lawyer in town that will!

A colleague asked me this morning if I had seen the Microsoft Mesh announcement.  I said I had, and that I thought it looked really pretty, but I didn’t get it.  “It looks like a solution in need of a problem,” I said.  My colleague went on to say that this was basically what Joel on Software had also said, and I just got a kick out of reading Joel’s diatribe.  I wish I wrote half as well as Joel.

Although I am not excited about Mesh, I am not as pessimistic about it as Joel is.  I think it’s great that Microsoft has projects like this.  Microsoft should be trying to innovate in as many ways as it can; and with innovation comes experimentation.  That’s not a bad thing, although Joel seems to think it is.

My only concern is that this project appears to have come from Ray Ozzie himself. It seems like something that a couple of smart kids out of school could do.  If I had the resources of Ray Ozzie behind me, I hope I’d come up with something much bigger.  Products that don’t change the world are not worthy of the Chief Architect at Microsoft.  So far, Mesh seems smallish.  But, he’s a smart guy.  Maybe the world-changing part is still coming; and if so, that’s great.

Alright, this is just a prediction.

The decision for Microsoft this weekend is whether they still want Yahoo or not.  If they still want it, it will be worth it for them to expedite the deal and increase their offer.  Going into a proxy fight doesn’t help anyone, and just drags this out.  So, in my view, there is zero chance of a proxy fight; if Microsoft still wants Yahoo, they’ll raise the offer.

If, however, Microsoft has decided they don’t want Yahoo, they’ll walk away.  I don’t believe those that speculate Ballmer would go through with the deal to avoid “losing face”.  There are plenty that would think Microsoft did the right thing by walking anyway.

Now, should Microsoft walk away, the Yahoo stock will tumble; if it stops at ~$20, where it was before the Microsoft offer, Yahoo should be pretty happy.  It may drop steeper than that.  Yahoo management knows this.  If Microsoft really wanted to play poker here, they could just wait 6 months and pick it up for even less.  But Microsoft doesn’t want that.  Microsoft wants this deal done now so that they can get back to business.  Yahoo doesn’t want the stock to tumble.

Based on Microsoft’s public comments about the advertising market over the next 5-10 years, I believe Microsoft wants Yahoo.  They believe the market they are trying to conquer is far larger than the price of Yahoo.  They don’t want to pay more for Yahoo (who would), but they know that any price less than $50B still pays itself back over the next 10 years if successful (and of course, Microsoft internally believes it will succeed).  As such, they’re going to do everything they can to close this deal.

I suspect a nominally increased offer from Microsoft has already been made. This will be enough that the chief Yahoos can claim victory and accept the deal at the same time.  This thing is going forward.

But what do I know.  More predictions.

The Windows Disk Scheduler is simply retarded.  Here is what the usage of my disk looks like.  I’ve got 200GB of unused space, and Windows insists on fragging up the 16% of the disk that it actually uses!

If you don’t defrag nightly already, you should.  See this KB Article from Microsoft for instructions.

Recently eBay has been getting beaten up as it does fee restructuring.  It makes me wonder if an old idea is ready to come to life:  Distributed Classifieds.

Why Do We Need Distributed Classifieds?

When you’ve got something to sell, you should be in control. You have the goods, so you chose your marketing, you chose your price, and you chose your guarantees, service, and customer support.  Why should any company - eBay included - dictate to you how much they get?  Shouldn’t it be the other way around, and you tell eBay how much you’re willing to give to them?  After all - you are the seller!

eBay gets away with this because they are a centralized server.  They control everything, but also provide the product base from their sellers and the client base of buyers.  Since they created the market, you pay them to be part of their world.  Unfortunately, you sacrifice a lot of control and pricing when you do this.

Distributed classifieds allow multiple markets to co-exist and put the seller in control of the price.

How Distributed Classifieds could work - Finder’s Fees

With a distributed system, the seller would start out by posting his classified.  Imagine something like this:

Red Bicycle For Sale - $200
2 years old, good condition.
Berkeley, CA
Feb 20, 2008 2:13pm
Finders Fee:  $10

All of this looks pretty standard.  But what is the “Finder’s fee?”  The Finder’s Fee is the seller’s proposed “listing price” to any market.  A market is anyone that helps find a buyer for this product.  eBay, for example, could be a market.  Or, “John’s House of Bicycles” could be a market.  For whoever finds a buyer for this item, the seller is willing to pay $10.

Why is This Good?

In this new world, the seller doesn’t get locked into a single market.  With eBay, once you’ve listed your items you are obligated to sell through eBay even if a higher bidder emerges from another market.  For example, you couldn’t post your item both in the newspaper and also on eBay without losing reputation on eBay.  This is not right - you should be able to sell to the highest bidder under any circumstances.

Search Glues It All Together

One problem facing sellers today is which market to sell the products on.  Choices are numerous, but you want the ones which are most profitable, easiest to use, and have the largest collection of buyers.  Examples of markets you could choose include Craigslist, eBay, your newspaper, a piece of paper on your dorm bulletin board, etc.

But, shouldn’t you post it once, and have the markets find your listing automatically?  Just as search can find web pages, what if each market crawled the web looking for items for sale?  Instead of you going to the market, you simply post your listing, and they find you.  RSS has led the way here - using pingservers, you could post once, ping a few servers to let them know of your new posting, and then a plethora of potential markets would pick up your for-sale item.

Other Details

I’m leaving out lots of details about how reputation systems work, how to handle auctions, how to guarantee payments, and more.  Some of these problems are easy, some are hard.   But I believe they can be solved.

Once solved, the world is a better place:

  - Sellers rejoice in selling to the best customer. 

  - Buyers rejoice in getting lower prices. 

  - Businesses rejoice because there is no central system monopoly (eBay!) for all classifieds.

A distributed eBay would rock.