Is Yahoo! a good buy for Microsoft?

For a couple of weeks now, rumors of Microsoft having discussions to buy web portal Yahoo! for $50 Billion have been bubbling again. Apparently, this wasn’t the first time Microsoft trying to buy a stake at Yahoo! But this time around, the Redmond giant wants all of it.

Why, because it’s already losing the internet race to Google and maybe Bill or Steve was thinking if they get Yahoo!, their combined resources and technology could at least break the big G’s dominance in search (Ballmer, for one, isn’t ruling out the possible acquisition). Remember that Google is trying to creep into Microsoft’s office application and productivity business by giving away free counterparts of MS Word, Excel and most recently PowerPoint on a scaled-down web app version.

So, even if Dvorack says that a Microsoft and Yahoo! doesn’t make sense to him (mainly because there are too many overlaps and differences in corporate culture), can we really look past that and check what will become of these two once they merge?

• Microsoft can just leave the battle for search to the Yahoo! engineers, adding to its resources and manpower it’s own team of search experts. Junk MSN Live and go for Yahoo! Panama.
• Move HotMail users to Yahoo! Mail. I think Yahoo! mail is in the better position and is currently the dominant player here with GMail nowhere in sight.
• Integrate YM and MSN, practically doubling its userbase for a runaway race against AOL’s AIM and Google GTalk.
• Yahoo! is great with communities — Flickr over Picasa, Yahoo!Groups over GoogleGroups.
• Combined internet advertising could close in the gap for Google though they have yet to come up with a much better AdWords/Adsense combo yet. Yahoo! should go global with its YPN roll-out.

There are so many areas where Yahoo! is still ahead of Google and if Microsoft thinks that buying the portal will slow down Google’s dominance or cut down its market share, then that $50 B is spare change to them. Still, some would call it an outright monopoly. But, isn’t Google becoming another Microsoft as well?