Video: Interpreting numbers with Google Analytics

Check out this video to understand how and what the number mean to your user coming to your site. It’s a pretty good video with clear and simple explanation. w00t. Now I know what the number means and though it ain’t good but I will work hard on it.

Love letter

Sorry for ditching you for her. You’re always by my side but I did not realised how important you were to me. Every time I’m having something new, you are always the first to respond as well as to let the people come to understand how I am feeling (new blog post). You are always able to give me what I want (search result).

It is until I dump you for rednano then I realised how senstive you were to my needs. It took her a month to find out about my past (old blog post) and even till now she is still so self-centered. It’s all about herself.

Thanks for being always on my side. Please accept me once more. I promise I won’t “jump ship” again.

Microsoft could nominate proxy slate of directors for Yahoo, says report

Acquisition of Yahoo has stalled for quite some time and Microsoft has been taking quite a laid back stance towards such issue. Yahoo on the other hand has been doing stuff to piss Microsoft off such as the use of Adsense. For Microsoft, Yahoo acquisition must go through and they’re very shrewd not to allow people squeeze more money out of them.

A proxy takeover is a possibility but it means that time is needed to change the board of directors. By that time, Yahoo might have done enough damage sabotage the deal. It wouldn’t be nice if Microsoft takeover Yahoo and most of their revenue comes from Adsense.

Microsoft could nominate proxy slate of directors for Yahoo, says report: “NEW YORK : Microsoft could make its next move against Yahoo Wednesday with the software giant likely to try and replace Yahoo’s board of directors, the Wall Street Journal reported.”

(Via CNA > Business News.)

Google Pagerank update

Yup google pagerank is shifting and I’m happy to move up to page rank 3. Haha either that doing some SEO or attending events and get all the links are working. Either way, I’m glad to move up the ladder. Elocin and Adlina are all now pr4 blogger. Peeps like Alice and Jean have been there for quite some time. Hope by the next page rank update, I will move up to 4 too. So what’s your page rank?

tip: Just install a plugin in mozilla and you can see it anytime, anywhere.

Want to know more about pagerank? Click here.

Why I don’t like Rednano

When searching for my blog - plaktoz.

You see they don’t even bother to crawl my current website after so many months. Sigh~ and the top links are all from my friends who link me long long time ago.

When searching for my name - tianhong.

Now you understand why I like Google

China Law Could Impede Microsoft Deal for Yahoo

This will definitely put a brake in Microsoft acquisition of Yahoo and to reconsider their bid. If China Yahoo needs to be separated from the main deal, Microsoft may not be bidding at such a high price. Seems like this is good news for Google.

China Law Could Impede Microsoft Deal for Yahoo: “In August, a Chinese antimonopoly law takes effect that will extend the nation’s economic influence far beyond its borders.”

(Via NYT > Technology.)

Google starts letting users edit documents offline

Wow this is something great. Imagine you can edit your documents offline and synchronizes with the server copy when you get back your connection. It’s somehow similar to the concept of Google Gear. I got the feeling that this is the one of the way to combat MS Silverlight and Adobe air.

But the down point is that you still need to have your browser opened the whole time before you get back your connection. Updates from my friend that gear actually do storing of data into machine so as to access it offline and synchronizes back to server when online.

Shucks, should I ditch NetNewsReader for Google Reader?

Google starts letting users edit documents offline: “SAN FRANCISCO - GOOGLE said it is taking the next step to make its Web-based software useful in the real world of spotty Internet access by allowing users to edit word processing documents offline.”

(Via Straits Times Interactive - LATEST NEWS.)

Argument on Google collecting IP (Part 2)

I particularly like this post on the analysis on why Google argument is flawed. What’s really scary is that Google has the ability to track down user all the way to individual household to provide the most relevant advertisement when other information is used.

Is there any other way to stop google from tracking our user preference? Especially when I heard from my friend that MacBook Hardware address is actually unique, which puts me at the risk as a even easier target to track down. Sigh…

Extracted by NYTimes

My post about whether Google’s records of the Internet Protocol address should be considered personal information under privacy law, brought two comments from Googlers: Matt Cutts, an engineer, and from Peter Fleischer, Google’s global privacy counsel.

Both go over the many technical and legal reasons that the I.P. addresses in Google’s records can’t, in isolation, be tracked back to an individual. Very true.

But the converse is also true: The I.P. addresses Google collects, when combined with other information, can sometimes identify an individual, or a household.

This raises all sorts of implications that need to be considered as we move into a world where so many more actions we take will be logged digitally in some way.

The opposite of identification is anonymity. When I.P. addresses of Internet actions are all recorded, anonymity is harder to preserve.

Logging I.P. addresses is similar to a security camera recording everyone entering your store. Without any more information, you don’t know the names or identities of any of the people on the recording. But that recording makes it much easier to gather that information and find out who is shopping. Some people you can identify because they go on to buy something providing their names. Other people you can’t identify, but the government with its database of drivers licenses photographs or other investigative techniques can.

Mr. Fleischer acknowledges that Google’s records, combined with those from an Internet service provider, can indeed link a particular computer to a particular pattern of searches. He says I.S.P.’s, by law, can’t give that information to Google. But he admits that government investigators or even private litigators can:

In order for someone to tie the IP to an account holder, there have to be at least two subpoenas issued: one to Google and a separate one to the ISP.

This is important because people have lots of reasons to keep information private. They may not want Google to use for advertising. But they may also want to keep secrets from people who may have the right to sue them.

Mr. Fleischer discusses at some length the technicalities of European law over what defines personal information. I.P. addresses, he argues don’t qualify. And more broadly, he suggests that some of the general principles that apply to personal information—standards of notice and choice, for example– aren’t always appropriate for I.P. addresses.

Perhaps we should start considering another category: partially personal information—bits of data that can be personal under certain circumstances. There are real questions about who should collect this information, under what circumstances, and what they should do with it.

The statements by Google and others that simply argue that I.P. addresses aren’t personal distract people from the thoughtful understanding of what they are and how they can be used.

IP ain’t personal? It really depends.

Everything can be right depending on the perspective he/she is putting across. However, I agree with the author that IP can be a bit personal even though it is shared. To speak frankly, it is a ploy by Google to extract more data out of individual to give people a better “personal” search.

However this runs at the risk of being tracked by Google or what you’re actually surfing. From the business or personal point of view, this ain’t a good thing and it can be scary at times.

Extracted at NYTimes - By Saul Hansell

Google has responded to European regulators who have suggested that Internet Protocol addresses of users be considered personally identifiable information.

Not surprisingly, it disagrees.

The issue matters because the standards for what companies do with data that can be traced back to an individual are subject to tighter rules than other information they use — as they should be. Google records the I.P. address associated with every search it handles.

In a post on the Google Public Policy Blog, Alma Whitten, a software engineer, points out that often the I.P. address assigned to any one computer is changed on a regular basis by the Internet provider that services that computer.

Google, she writes, strongly supports “the idea that data protection laws should apply to any data that could identify you. The reality is though that in most cases, an I.P. address without additional information cannot.”

True enough. But it’s also true that if someone has your I.P. address, it makes it much easier to gather the additional information needed to identify you.

Think of an I.P. address as one of two keys needed to unlock a door. Just because the second key is needed too, doesn’t mean the first key shouldn’t also be protected.

In the case of dynamic I.P. addresses — those that are periodically changed — the other key is held by the Internet providers themselves. And they are routinely forced to provide information about which customer was assigned what I.P. address at a given time in response to legal proceedings.

Technically, fixed I.P. addresses — those that are permanently assigned to a given computer — are also not personal information, because a Web site doesn’t know who is using that computer. But once the site, or a partner, convinces a user at that site to reveal his or her identity — to register for a service, make a purchase, or even enter a sweepstakes — that information can be associated with everything else the users of that computer do.

Yes, there may be more than one person who uses a computer, just as there is often more than one person who uses a home telephone. Few people would say that this means phone numbers aren’t personal

Google is right to say that an I.P. address isn’t exactly the same thing as your Social Security number. But its blog post also skips over all the ways that having your I.P address can help someone unlock information about what you do online. And doing so doesn’t help the debate over what the right protections for personal information should be.

Yahoo possible partnership with News Corp

In any way, out of so many companies, one of them has to sacrifice and joined partnership with Yahoo. Many wouldn’t want Microsoft to get into the search business. Remember Netscape?

Microsoft has successfully entered the gaming industry with it’s Xbox.

The internet with IE.

It is not surprise to see that Google is scared that MS will get into the search business with 20% market share. Is there any other better way for Microsoft to takeover Yahoo other than hostile bid?

But which company in the world can stop this giant from expanding? I can only see them getting bigger and bigger unless the Open Source community is able to create some products that disrupt Windows. Unbuntu, Redhat ooooorrr Solaris? I forgot. There’s a Leopard!

Yahoo discussing possible partnership with News Corp: ”

SAN FRANCISCO - YAHOO Inc is discussing a possible partnership with News Corp in its latest effort to repel Microsoft Corp or prod its unsolicited suitor into raising its current takeover bid, according to a person familiar with the talks.”

(Via Straits Times Interactive - LATEST NEWS.)

Yahoo to Reject Microsoft’s Takeover Bid

It is quite shocking that Yahoo will reject the $31 billion bid. Is Yahoo overvaluing themselves? They are losing market share to Google and unless they have tricks up their sleeve, I doubt they can hold on to their current market share. Well, how many of us use Yahoo instead of Google?

While selling it to Microsoft may not be a good deal. The next option they have is to outsource their search to Google but this will severly undermine their investment in Panama, which they started off with the intention to compete against Google. It is also a no-no move because Yahoo will lose their core business in search market.

My opinion for this move by Yahoo is that it wants to go into a negotiation phase where they could squeeze more money out from Microsoft (minimum expectation of $40B).

Considering that so many people did hate Microsoft, I expect even if they got Yahoo, they will continue to erode their market share.

Yahoo Expected to Reject Microsoft’s Takeover Bid: “Yahoo’s board decided that Microsoft’s $44.6 billion hostile bid undervalues the company, people involved said.”

(Via NYT > Technology.)

Kudos to the people out in the blogosphere in being able to see through Microsoft’s intention right from the start. While Google is eating into Microsoft’s office suite market with its own web office suite available for free on the Internet. It remains to be seen if Microsoft will make their own set of Internet office suite free. It should be quite unlikely as they will be cannabilizing their own market.

Facing Free Software, Microsoft Looks to Yahoo: “Internet-centered programs that compete with the core products of Microsoft are a driver of its bid for Yahoo.”

(Via NYT > Technology.)

Apple may move to protect Yahoo against Microsoft

Now even Steve Jobs is into the battle for Yahoo. Really an unexpected change of events. While Microsoft is willing to go into debt to finance for the acquisition for Yahoo ($44B), this means how valuable they view Yahoo as the platform to delivering applications.

Think about it, Yahoo messenging and Msn messenging is the two highest traffic communication tool while Yahoo mail and Hotmail is also two of the most popular email service around, so practically Microsoft will have almost full control of the email and messenging market. Isn’t that scary?

In the meantime, lets just wait for more news to happen. Maybe Mittal (steel magnate) or some tycoon in the middle east will make the offer. This will really be Interesting.

Another question that is bothering me is what has Apple get to gain from this. Are they just to help? In my opinion this is quite unlikely cos there’s history of Apple collaborating with other companies just to turn their backs on them.

Apple may move to protect Yahoo against Microsoft: “Apple, News Corp., others named as potential suitors for Yahoo as Microsoft makes its bid

Apple and News Corp. may make rival bids for Yahoo to see off Microsoft’s hostile takeover bid for the internet company.

”

(Via Macworld UK.)

Google taking action to stop Microsoft from acquiring Yahoo

Really interesting indeed to see this happening just a few days after the initial announcement. While this is quite expected from Google. Much of the discussion with my friends actually come to the conclusion that even the merger won’t help.

While Google can’t acquire Yahoo in the first place, the very next thing they can do is to disrupt their plan. This is really a brilliant idea but will it be an antidote to the current situation?

Microsoft with it’s tons of cash after acquiring some search market can do a lot of things to disrupt Google. Microsoft outearned Google even now. Imagine Bill Gates just announce their goal of the year is to formulate a plan and to throw all their profits into it for the next few years just to kill off Google.

Maybe this is what Google is afraid of…

Extracted from NYT
By ANDREW ROSS SORKIN and MIGUEL HELFT
Published: February 4, 2008

Standing between a marriage of Microsoft and Yahoo may be the technology behemoth that has continually outsmarted them: Google.

In an unusually aggressive effort to prevent Microsoft from moving forward with its $44.6 billion hostile bid for Yahoo, Google emerged over the weekend with plans to play the role of spoiler.

Publicly, Google came out against the deal, contending in a statement that the pairing, proposed by Microsoft on Friday in the form of a hostile offer, would pose threats to competition that need to be examined by policy makers around the world.

Privately, Google, seeing the potential deal as a direct attack, went much further. Its chief executive, Eric E. Schmidt, placed a call to Yahoo’s chief, Jerry Yang, offering the company’s help in fending off Microsoft, possibly in the form of a partnership between the companies, people briefed on the call said.

Google’s lobbyists in Washington have also begun plotting how it might present a case against the transaction to lawmakers, people briefed on the company’s plans said. Google could benefit by simply prolonging a regulatory review until after the next president takes office.

In addition, several Google executives made “back-channel” calls over the weekend to allies at companies like Time Warner, which owns AOL, to inquire whether they planned to pursue a rival offer and how they could assist, these people said. Google owns 5 percent of AOL.

Despite Google’s efforts and the work of Yahoo’s own bankers over the weekend to garner interest in a bid to rival Microsoft’s, one did not seem likely, at least at this early stage.

For example, a spokesman for the News Corporation said Sunday night that it was not preparing a bid, and other frequently named prospective suitors like Time Warner, AT&T and Comcast have not begun work on offers, people close to them said. They suggested that they did not want to enter a bidding war with Microsoft, which could easily top their offers.

A spokesman for Time Warner declined to comment, as did a spokesman for Comcast. A representative for AT&T could not be reached.

In the meantime, people close to Yahoo said that the company received a flurry of inquires over the weekend from potential suitors. Some people inside Yahoo have even speculated about the prospect of breaking up the company. That could mean selling or outsourcing its search-related business to Google and spinning off or selling its operations that product original content, these people said.

“Everyone is considering all kinds of options and deal on search is one of them,” a person familiar with the situation said.

One person involved in Yahoo’s deliberations suggested that “the sum of the parts are worth more than the whole,” arguing that its various pieces like Yahoo Finance, for example, could be sold to a company like the News Corporation for a huge premium while Yahoo Sports could be sold to a company like ESPN, a unit of the Walt Disney Company.

Executives at rival companies were less optimistic about such a breakup strategy. “No one can get to a $44 billion price,” one executive at a major media company said, “even if you split it into a dozen pieces.”

In making its bid for Yahoo, Microsoft is betting that past antitrust rulings against it for abusing its monopoly power in personal computer software will not restrain its hand in an Internet deal.

In the United States, a federal district court in Washington ruled in 2001 that Microsoft had repeatedly violated the law by stifling the threat to its monopoly position posed by Netscape, which popularized the Web browser. The suit, brought during the Clinton administration, was settled by the Bush administration. But as a result of a consent decree extending through 2009, a federal court and a three-member team of technical experts monitors Microsoft’s behavior.

In 2006, for example, after Google complained to the Justice Department and the European Commission that Microsoft was making its MSN search engine the default in the most recent version of its Web browser, Microsoft modified the software so that consumers could easily change to Google or Yahoo.

In Google’s statement on Sunday, it said that the potential purchase of Yahoo by Microsoft could pose threats to competition that needed to be examined by policy makers.

Google’s broadly worded concerns lacked detailed claims about any anticompetitive effects of the deal, and the company did not publicly ask regulators to take specific actions at this time.

“Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?” asked David Drummond, Google’s senior vice president and chief legal officer, writing on the company’s blog.

Yahoo and Microsoft declined to comment Sunday. On Friday, Microsoft’s general counsel, Bradford L. Smith, said in a statement: “The combination of Microsoft and Yahoo will create a more competitive marketplace by establishing a compelling No. 2 competitor for Internet search and online advertising.”

Google’s effort to derail or delay the deal on antitrust grounds mirrors Microsoft’s own actions with respect to Google’s bid for the online advertising specialist DoubleClick for $3.1 billion, announced in April.

The strategy is not surprising, considering that any delays would work to Google’s benefit. “Google can tap into all of the ill will that Microsoft has created in the last couple of decades on the antitrust front,” said Eric Goldman, director the High-Tech Law Institute at the Santa Clara University School of Law.

The outcome of any antitrust inquiry will hinge, in part, on how regulators define various markets. Microsoft-Yahoo, for instance, would have a large share of the Web-based e-mail market, but a smaller share of the overall e-mail market.

“The potential concern would be that Microsoft, if it acquires Yahoo, could do on the Internet what it did in the personal computer world — make technical standards more Microsoft-centric and steer consumers to its products,” said Stephen D. Houck, a lawyer representing the states involved in the consent decree against Microsoft.

Yahoo has not made a public statement about the proposed deal since Friday, when it said it was weighing Microsoft’s offer as well as alternatives and would “pursue the best course of action to maximize long-term value for shareholders.”

Carl W. Tobias, a law professor at the University of Richmond in Virginia, said an antitrust review of the Microsoft-Yahoo deal could take a long time and “may well bleed into a new administration with an entire new view on antitrust than the Bush administration.”

Steve Lohr contributed reporting.

Microsoft will own Yahoo eventually

Considering the amount of money Microsoft has, it is quite possible they have their ways and means to win the seat in Yahoo! Without any compeition from Google, I think Yahoo will eventually be owned by Microsoft.

Consider this, how many people can withstand the lure of money. While I don’t want Yahoo to be owned by Microsoft, I also wouldn’t want Google to own it. They are already too big a corporation.

This is another classic case of how the rich gets richer by buying and the poor gets poorer also by buying.

Bear hug letters are an art form. They are designed to put an unwilling takeover target on notice that they are no longer safe, but to fall short of being blatantly hostile.

Microsoft’s bear-hug letter to Yahoo, made public early Friday along with Microsoft’s unsolicited $44.6 billion takeover bid, is no different. It contains all the nice-nice language you typically see in these letters (this is the hug) as well as a warning that there is a bear waiting to come out.

Microsoft states in its letter that:

Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

So, what is Microsoft really getting at? What is the “bear” here?

Yahoo has a shareholders rights plan, also known as a poison pill, with a 15 percent trigger. As a result, Microsoft cannot effectively acquire an interest in Yahoo above that threshold unless it obtains prior approval from Yahoo’s board.

But if the Yahoo board resists Microsoft’s offer, Microsoft can still pursue a hostile bid.

In the face of an unaccommodating board, the only effective option for Microsoft to force Yahoo’s directors to come to the negotiating table or to otherwise acquire Yahoo is a proxy contest.

Here, the timing of Microsoft’s letter is not random. Section 2.5 of Yahoo’s by-laws require that:

For proposals and nominations to be timely, a stockholder’s notice shall be received by the secretary at the principal executive offices of the Corporation in the case of the annual meeting not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting of stockholders.

Yahoo’s last annual meeting was on June 12, 2007. By my count, the notice date period therefore begins on Feb. 13, 2008, and ends March 14, 2008.

Yahoo’s by-laws and certificate of incorporation prohibit actions by written consent and special meetings.

So, Microsoft can only launch a proxy contest to replace the Yahoo directors at Yahoo’s annual meeting. And if it wants to do so, it has a window from mid-February to mid-March to make such nominations.

Yahoo does not have a staggered board, so all of its directors are up for nomination this year. And, per section 3.3 of the by-laws, in a contested election, directors are elected by a plurality of votes cast. This puts Yahoo rather at the mercy of the bear. It also explains the timing of Microsoft’s offer.

If Microsoft launched a proxy contest, it would be a rather novel thing for a stodgy tech company. According to FactSet SharkWatch, since 2001 there have been only 26 proxy contests in connection with a takeover bid initiated by corporate buyers.

The most recent success story: Roche Holding’s agreement to acquire Ventana Medical Systems in the shadow of a looming proxy contest.

Good luck to you, Yahoo.

Microsoft’s letter to the Yahoo board. How will Google react?

It has been an eventful day for Microsoft and Yahoo. No one knows if Yahoo is willing to sell themselves to Microsoft though. Microsoft has been eyeing the search engine market very long but without success due to the over-dominance of google and their only way to claw back in the game is to acquire Yahoo, the second biggest search engine.

However, are they willing to sell the stock to Microsoft is still another big issue. From various report, people wise, Yahoo and Microsoft have not been in friendly term.

As much as one would wonder, is the merger in anyway going to change the fact that google is still going to dominate the search market for at least another 4-5 years?

How Google is going to react to this situation? How the merger of Microsoft and Yahoo will pose a challenge to their future plan? Why don’t Google buy over Yahoo  to monopolize the search market?
It’s going to be an exciting time ahead for the next few months.

Guardian January 31, 2008

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer

Dear Members of the Board:

I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.

Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.

We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!’s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.

Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.

In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:

Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.

Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.

Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.

Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.

We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.

We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.

Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.

Sincerely yours,

/s/ Steven A. Ballmer

Steven A. Ballmer

Chief Executive Officer

Microsoft Corporation