1) Google gets the best and the brightest from Yahoo. Why? Compensation. Microsoft, in a titanic mistake, eliminated stock options as an employee incentive early in the decade, replacing them with much less lucrative and leveraged restricted stock. If you’re a hot programmer at Yahoo, you’ll get options at Google — not at Microsoft. Aside from compensation, Google’s culture, speed, lack of bureaucracy, location, lack of legacy will be big attractors of talent.
2) The confusion factor. Microsoft has never acquired or absorbed anything as large as Yahoo — unlike Cisco it has no culture or processes around large-scale integration. Microsoft’s tight programming ethic will be naturally suspicious of Yahoo and its culture of media and advertising. When the inevitable integration plans are drafted, MSN and the search gurus at Microsoft will defend turf. In a market defined by a quick pace, Microsoft will take years to get this integration right.
3) Governmental entanglement. Google knows how sensitized Microsoft is to government intervention in its business. That’s why the company is lobbying in Washington for oversight and review — a strategy that will place Microsoft back in the hands of regulators. Google probably won’t stop the deal, but it will throw sand in the gears and prolong the process. In a war being fought at high speed, those few lost months could prove to be precious.