No doubt by now you have heard the unsolicited bid that Microsoft has made of $45 billion for Yahoo. Should Google be worried? Certainly, Microsoft/Yahoo will be a formidable opponent, but let’s examine what this means for the social media landscape:

Social Bookmarking

Yahoo already owns del.icio.us, the most popular social bookmarking service out there. Google can counter this with Google Reader shared stories and Google Bookmarks, but del.icio.us is more flexible and made for bookmarking purposes.

Photo Sharing

Yahoo also has Flickr, arguably the largest photo sharing platform out there. True that Google has Picasa, but its adoption rate is far smaller.

Blogging

Windows Live Spaces was once reported to be the largest blogging platform, and Yahoo 360 is also notable in the space. Google already has the widely used Blogger platform. Lately though, Wordpress is really the one to beat in this market, especially with their latest round of funding lead by the New York Times.

Social Networking / News

You might think that Microsoft doesn’t have a part in social media, but don’t forget that they have a notable stake in Facebook, and have been rumored to be interested in buying Digg, the world’s leading social news site. Should this merger come to pass, Google will have to focus on the prize, as competition will be more fierce. Google has Google Dice, still a far cry of traffic as compared to the likes of Digg, Reddit, Mixx, Propeller, and StumbleUpon.

Instant Messaging

An interesting spot to think about here is the convergence of instant messaging in the social media space. As people need to communicate and collaborate at a faster rate, instant messaging becomes highly important. Enter Microsoft/Yahoo: Windows Live Messenger and Yahoo Messenger already have a much higher penetration than Google Talk, and the potential merger will allow them to further dominate in this space. Look for interesting activity here, perhaps even a larger position in microblogging.

Bottom Line

Will this merger make Microsoft and Yahooo stronger together? Perhaps. But the sheer size of both of these companies and all sorts of competing technologies makes this sound very challenging to integrate. This should give Google an advantage to gear up while the two companies get organized.

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