Corporate monikers I never want to hear repeated: eBaysoft. Microsoftbid. And, of course, MicroBay. I've been weighing the potential letterhead after The New York Post speculated over the holiday weekend that Microsoft (NASDAQ:MSFT) and eBay (NASDAQ:EBAY) were about to get hitched.
I finally settled on my favorite: BallmerBay. (It narrowly bested eGates.) Combining the software titan with the online auction behemoth is an inspiring notion, but ultimately ludicrous. I'm no dummy. I can put the pieces together and see the logic in a union between the two bellwethers. I just can't fathom such a deal ever coming to pass.
Elephant mating rituals
If Microsoft sneezes the wrong way, antitrust watchdogs flinch. It's bad here in the United States, but even worse in less forgiving places like Europe. There may be little overlap between the two tech giants, but when you combine Microsoft's muscle in all things software and eBay's growing role in consumer-to-consumer exchanges, you're left with a beast that may be too large to justify.
Worse still, such a merger might only make Google (NASDAQ:GOOG) that much stronger. Right now, Google and eBay have a pretty neat working relationship. Type in anything like "chinchilla cages" or "Milli Vanilli concert tickets," and you'll probably see eBay as a sponsored ad. The presence wouldn't be so pervasive if it weren't mutually successful. Having eBay as an important advertiser may be the one thing keeping Google from more directly targeting eBay with stronger versions of Google Base for commerce and Google Pay as a PayPal foe.
That hestitation would probably fly right out the window if BallmerBay came to pass. Google has been pretty slow in arming itself against Microsoft, figuring that Mr. Softy is a slumbering giant. Google's software alliance with Sun Microsystems (NASDAQ:SUNW) has been lightweight on the surface, and even the search giant's Microsoft-like initiative to pay computer makers to preload its applications on new systems was hardly Machiavellian.
As important as the stakes are here, the pieces have been moving slowly around the dot-com chessboard. A bold move by Microsoft would turn this match into an active round of speed chess. The slower the game goes, the longer all parties can live in denial of the eventual no-holds-barred confrontation.
Be my little eBay
If the battle does get bloody, one may assume that Microsoft would be better off with eBay than without it. Skype and Microsoft's IM platform would get along splendidly. MSN's search business would improve, since eBay excels in areas where money and merchandise are being swapped online. Reaching a crowd of educated Internet users that are open to e-commerce is like opening up a soda fountain in the middle of a crowded desert. The advertisers to Microsoft's AdCenter would have to be beaten back with a stick.
The pieces fit, but then one has to contemplate the sin of synergy. How many of Microsoft's retail advertisers would resent enriching a company that's channeling customers to a secondhand marketplace? How many eBay power sellers, fearing absorption into the Microsoft bloodstream, would move elsewhere? eBay's Skype is a bigger hit in Europe than it is domestically, and we all know how the European Union feels about Microsoft.
The Post article cites unidentified sources that had Microsoft looking at both eBay and Yahoo! (NASDAQ:YHOO) as potential acquisition targets before keying in on the former. If those claims are true, last week's cross-promotional pact between eBay and Yahoo! just got a whole lot more intriguing.
Good field, no hit
Fact is stranger than fiction. As incredible as a lot of this buyout fodder seems, we know that the bellwethers love to talk. We had Google, Yahoo!, and Microsoft all publicly pining for a piece of Time Warner's (NYSE:TWX) AOL, before Google emerged victorious with a 5% stake at a cool $1 billion price tag.
It's unreal. It leaves me willing to suspend belief. That frees you and I up to simply analyze the potential pairings. BallmerBay? eGates? eBay Windows? Let's bury these silly names once and for all.
eBay and Time Warner have both made the cut as active Motley Fool Stock Advisor recommendations. Microsoft is a recent addition to the Inside Value newsletter. Try any of our newsletters free for 30 days.
Longtime Fool contributor Rick Munarriz has never been involved in any buyout rumors. He does not own shares in any of the companies mentioned in this story. He is a member of the Rule Breakers newsletter team. The Fool has a disclosure policy .
