What if Microsoft-Yahoo! had tied the knot?

A year ago, on 1 February 2008, Microsoft chief executive Steve Ballmer told the world his company wanted to buy Yahoo!.

Despite months of discussions, the deal never materialised, distressing many Yahoo! shareholders and hastening Yahoo!'s replacement of CEO Jerry Yang with Carol Bartz. But what if Yang had got up on the other side of the bed one day a year ago and led his company to accept the offer?

It's impossible to know what would have happened, of course. But an exercise in speculation can be illuminating.

So let's suppose that Yahoo! agreed to Microsoft's acquisition offer after bargaining Microsoft up a notch on the price tag to, say, $31 per share from the original $29.

First, the challenge of antitrust approval would have arisen. But the US Justice Department has shown itself to be more concerned with checking Google's power, taking Microsoft's side when it came to the ill-fated Yahoo! search-advertising deal with Google.

And given that the EU is only now getting around to the issue of Microsoft bundling a web browser with its operating system, any big compunctions about Microhoo probably wouldn't have set in until 2015.

So Microsoft and Yahoo! probably could have cleared that hurdle, but not quickly, and there are other details to reckon with, so let's suppose that the deal closed in August. Yahoo! shareholders would have received a chunk of Microsoft shares and a wad of money that looks princely in comparison with the present $11.74 value of their Yahoo! shares.

So next up would have been the big challenge: integration, which, as former Sun chief executive Scott McNealy famously described it regarding the merger of HP and Compaq Computer, is like watching two rubbish trucks collide in slow motion.

Executives fond of competing pet projects would be pitted against each other, tooting their horns and trying to fend off others' with candid assessments - and Yahoo! already had enough internally competing projects on its own.

Some parts of the Microhoo integration would have been relatively straightforward. First, top management.

Given that we've already rewritten history with Yang signing off on the deal, which means he probably would have stuck around a year for appearances' sake. It wouldn't be easy but Yang at least already has years of experience reporting to another CEO.

So which company has the better brand online? Yahoo!.

Microsoft has been hobbled by its MSN vs Live branding muddiness and the Yahoo! brand has a long history of great recognition. In April 2008, Yahoo!'s front page had 61 per cent portal market share to MSN's 20 per cent, according to Hitwise. But brands live a long time, and with the merger only closed for a few months by now, Microsoft probably wouldn't have had much of a chance to make big changes.

Technologically, Yahoo! and Microsoft are worlds apart. Yahoo!'s widespread use of open source software and fondness for the Firefox browser would raise hackles all over Microsoft. But for the sake of expediency, and to avoid spooking the Yahoo! administrators and coders who actually know how the internet property is wired, Microsoft almost certainly would have left things stand as is for at least a year.

Philosophically, though, Microsoft and Yahoo! are converging, partly because the internet is only becoming more important and partly because they're being driven in the same direction by Google's competitive threat. Both want sophisticated online services, both want a better search site with more traffic, both want to be a hub for people's lives on the internet, both want to be an unavoidable part of online advertising.

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