Google has once again won a tight popularity contest and the voter, none other than the big number 2 in search, Yahoo!. The reason Yahoo gives it shareholders is straight and to the point. "The Yahoo!-Google agreement is financially attractive and strikes the right strategic balance".
The letter continues with an explanation of why this deal would be beneficial to current shareholders and what it actually means for Yahoo! search and advertising. The deal will enable Google ads to be displayed alongside Yahoo! search results. Revenue would be then passed through two parties before reaching Yahoo!.
Google will receive payment from advertisers when ads are clicked on, the usual ad game, and for those ads that appear beside Yahoo search results, Google will pay Yahoo! a fee based on the click-throughs on those ads.
The letter does not make clear what the future will hold for Yahoo! sponsored ads.
As to why the deal with Google is better than the previously considered deal with Microsoft? Yahoo! reports in the letter that the deal proposed by Microsoft would have given too much power to the company by giving it veto rights in certain areas of business - including a sale of the search engine.
Despite the clear feelings of those on the top at Yahoo!, it's clear that many shareholders still consider an agreement with Microsoft a better and more profitable opportunity. Recent drops in the share price of Yahoo!, a full 16%, only echoe this sentiment.
The closing of the letter makes an attempt to big up the current board of directors and Yahoo!, while trying to undermine the actions and views of Carl Icahn who is widely regarded as an influential and radical investor. The letter claims that Mr Icahn and his followers have no plan for the future of Yahoo! and that shareholders should put their faith (and their money) behind the existing board as they have the "independence, experience, knowledge and commitment to navigate the company through the rapidly-changing internet environment..."
Has Yahoo! stooped to begging and pleading with its shareholders to back the current plan with Google? It is clear that they are certainly making a clear appeal to its current members, specifically targeting the dissenters, to vote for the status quo to support the ad deal with Google.
