Microhoo, or YAOL?

Just yesterday I would have said that the only way Yahoo was going to survive the next five years would be to let Microsoft acquire them. Like Yahoo's CEO, I'm not fond of Microsoft, but sometimes, you have to make a deal with the devil if you want to survive (and then you fight like hell to keep your soul and stay on the side of the angels.) There have been talks of an AOL and Yahoo merger to prevent the Microsoft acquisition of Yahoo, but I never really took that seriously.

Until this morning, that is. It was announced the AOL purchased Bebo, a large social network. This is just one of many acquisition that AOL has made in the past year. They also announced a few weeks ago that they were opening up their Instant Messenging protocol so that third party developers could create applications that use the network (not that they weren't doing that already. Pidgin, Trillian, Digsby and Adium all connect to the AIM network.)

AOL apparently has big plans. Integration of AIM with Bebo will make for a very enticing social networking platform. What better way to leverage that then to use Yahoo's search, Buzz, and advertising to support the new AOL Bebo. Yahoo provides a way to monetize the new combined service, plus it would add Yahoo Messenger and Yahoo Mail to the mix.

It's an enticing idea. AOL would be a competitor again. So would Yahoo. Whether AOL would outright acquire Yahoo or do the sort of half merger that Yahoo was discussing with News Corp. is unclear. I would expect though, that AOL would acquire Yahoo simply because they'd want control over the mail and IM services.

The combined AOL/Yahoo would of course, be no match for Google in search advertising, especially with the approval of the Google/Doubleclick deal. But, with Bebo in the mix, it would certainly give Facebook and Myspace a run for their money.

Take that News Corp.