OStatic

On Friday, Microsoft CEO Steve Balmer sent a letter to Yahoo!’s board of directors informing them that time was running out for the Yahoo! board to accept a buyout offer from Microsoft. The nature and tone of the letter may betray Microsoft’s true intentions with regards to Yahoo!’s properties and raises some serious concerns. Β 

When the initial buyout offer was made, Microsoft was in the midst of making nice with the open source community. It was suggested that Microsoft was playing nice with open source folks not so much because of their problems with the EU, but to help ease the Yahoo! takeover. Based on the tone of the letter from Balmer to Yahoo!, it looks like the gloves have come off and Microsoft has come out swinging.

In his letter to Yahoo!, Balmer warns that continued stalling by the current executives may lead to a hostile takeover bid whereby Microsoft would appeal directly to Yahoo!’s board to elect officers that would approve the deal. Whereas Microsoft spun the initial offer as a good thing for both companies, offering shareholders a 60+% premium on the share price, the rapid move towards a hostile takeover could have serious consequences for the open source community.

Microsoft is pressuring Yahoo!’s board to take quick action or face a proxy battle, because it can. Late last month after Microsoft’s initial bid and Yahoo!’s initial rejection, Yahoo!’s board as well as financial analysts were underwhelmed with presentations made to the board by Yahoo! CEO Jerry Yang’s team outlining their vision of Yahoo!’s β€œtrue value” ahead of their upcoming financial report.
Yahoo!’s reliance on open source technology and their participation in the open source community stand little chance of helping to foster a more open source friendly attitude at Microsoft if Yahoo! is rushed into a badly thought out deal with Microsoft to appease stockholders.

The Yahoo!/Microsoft merger is going to be a major test of whether public companies that rely on open source technology have a net benefit for the open source community. Will Microsoft kill Zimbra, the open source mail server company Yahoo! recently acquired that competes directly against Microsoft Exchange? What will happen to YUI, Yahoo!’s open source JavaScript user interface? Will it just become a Visual Studio plugin? Both Yahoo!’s and Micorosoft’s handling of these issues will shape open source attitudes towards enterprise participants for many years to come. This will affect not only Yahoo! and Microsoft, but Google, Amazon and countless others big and small as well.

Will Yahoo!’s existing company bylaws, their board, voting shareholders or executives seek to protect open source resources during the merger or will it all be about the money?