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Facebook should buy Yahoo.

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I've looked through advice for Marissa Mayer and learned a little about her.

My first thought in reading those articles was that Yahoo should focus on mobile.

But I've had more time to think about it, and I've come to a different conclusion.

I believe that Marissa should clean up Yahoo so Facebook can buy Yahoo.

As of this writing on July 27, Facebook is worth $50 billion and Yahoo's core business is worth $2 billion once you've backed out the value of its cash, its stake in Alibaba (after taxes), and Yahoo Japan (after taxes).

Facebook raised $16 billion in its IPO, so it could afford to buy Yahoo for cash.

There are three major reasons Facebook should buy Yahoo:

1. It brings to Facebook a tremendous ad revenue stream and team. Yahoo is much better with branded ads than Facebook so Facebook could learn a lot from integrating Yahoo's ad teams. The combined company would have over $10 billion a year in revenue and a world-class ad network that can grow.

2. It vastly improves Facebook's communication offerings because they'd have a world-class email service in Yahoo mail. This solves one of the big holes in the Facebook strategy -- that email is universal and Facebook sucks at email. (I'm sure that Flickr, Yahoo Messenger, and Yahoo's mobile apps would be great assets that could be made more social by Facebook, too!)

3. It keeps Yahoo out of the hands of other likely suitors such as Google, LinkedIn, and Twitter. Yahoo's websites do 77 billion monthly pageviews (#3 on the Web behind YouTube and Facebook), so keeping those 600 million monthly actives integrated with the Facebook user experience is strategic. Especially since Facebook partner Microsoft controls sites #4 (, #5 (, #9 (, and #11 (

In addition, Marissa Mayer and Sheryl Sandberg have worked together before, and they are friends, which is a foundation for them being great teammates if they work together again.


So Facebook, there you go. It's a bold move. You can do it.

Buy Yahoo before LinkedIn buys Yahoo.

Buy Yahoo before Google buys Yahoo.

Without an earth changing idea, Facebook will collapse and take down the Web.

Buying Yahoo and making it social is an earth changing idea.

You're welcome.

One more thought. We heard this on July 26's Facebook earnings call:

[Zuckerberg] noted that Facebook wants to make every app social, but can’t build them all in house. Zuckerberg said “Over time it might make sense to build more of these things ourselves.”

Making Yahoo social is a radical idea. But it could be awesome, given Yahoo's consistently great content in news, sports, finance, and entertainment.

Deeply integrating Yahoo with Facebook could make Open Graph ready for prime time.


(image credits on the top photo: vogue and glamour)

I agree. Currently, Yahoo! doesn't know who our friends are. Today Yahoo is missing that X-Factor. Facebook can make then look cool and sexy. Friending Facebook could certainly revolutionize experience on Yahoo!

I was thinking that it could make Yahoo more useful by surfacing content my friends like.

absolutely. if u ever had a chance to use bing(who has partnership with Facebook to access our social graph) , they do exactly this by showing links our friends like in their search results. If yahoo could do this in all their media properties, it wud be awesome.

Every time I try to use Bing I'm unhappy with the search results.

Hopefully that's despite the Facebook integration, not because of it.

True. FB can only provide social graph. Getting relevant results is bings job.

even I don't use Bing but they say bing's travel search is superior than google.

I've tried Bing travel search and it's good but not consistently better than Google (or Kayak or Hipmunk for some searches!).

ohhh u clever Panda you !

I do what I can, Louise.

So far the response to this piece has been overwhelmingly positive.

Btw I just discovered this Nicholas Carlson article two weeks ago on why Facebook should buy Yahoo.

I wish I had read Carlson's article before writing mine! He makes great points.

Aside from the obvious lack of cash issues, this would be, theoretically, more of a merger. In that light, one can make a strong case for consolidation, but it will take a fall in the enterprise value of Yahoo! to accelerate that, and I'm sure Mayer has different plans :-)

At least we know she has an interesting exit for the company if her plans don't work out.

And in the meantime, she can dare to be as bold as she wants to be.

Buy Square. Or Etsy. Or Zynga. Or develop something in-house. Place big bets!

The first test for Mayer will be to clean up Yahoo!'s main properties and give them a "Google" like feel. If that doesn't happen in 2013, no chance of success. This will be the first sign. For now, I can't even open Yahoo! Sports pages -- horrible. She must know this given how clean Google's design is.

She knows it and has demanded change.

She's removing the ads from Yahoo Mail, too. Thank goodness.

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