Microsoft Won't Buy Yahoo: Good for Open Source?

by Ostatic Staff - May. 05, 2008

After several months of discussion and speculation, the Microsoft-Yahoo buyout deal is apparently off. At least, that's what both Microsoft and Yahoo announced over the weekend. There is some speculation that Microsoft CEO Steve Ballmer made his announcement in order to topple Yahoo's share price, in order to make another offer at a lower price. But for now, Yahoo is saying that they have come out of this fight stronger and more focused than before. Does this mean that we will see a change in Yahoo's commitment to open source?

Back when Microsoft announced its intention to buy Yahoo, many of us wondered whether Yahoo would be forced to get rid of its open-source projects in the wake of such a purchase. But after reading the press releases put out by Yahoo, in which they seem to indicate that they're aiming not only to survive, but to become a stronger and more profitable company, I have to wonder whether this might force Yahoo to give up some of its open-source projects.

My reasoning is as follows: Yahoo is not as profitable as it needs to be, which means that they begin to shed low-margin business units. Yahoo has already indicated its willingness to give much or all of its advertising business to Google; this presumably means that everything is on the table.

While it's undoubtedly true that open-source software has many benefits, we have yet to see an obvious indication that development (and giving away) open-source software leads to higher profits. Indeed, while we cannot pin Sun's steep decline in the last quarter solely on its embrace of open-source software, the correlation seems too strong to ignore. Which means that if Yahoo is looking to restrict itself to profitable ventures, they might stop funding some of the open-source projects they have supported until now.

I should note that what I'm writing is pure speculation: No one at Yahoo has even hinted that their support of such projects as YUI and Hadoop will go away. And indeed, those tools are essential to Yahoo's future, which means that we can expect them to continue to survive. But perhaps some smaller projects, such as Konfabulator, might not make the cut, interesting and fun as they might be.

At the end of the day, businesses need to make money -- and Microsoft, while not the only for-profit company out there, is known to be particularly aggressive on this front. Yahoo's reality has changed a great deal in the last few months, and it might be forced to be equally aggressive, if it wants to remain independent and profitable. Let's hope, for the sake of Yahoo's open-source support, that these won't be the first things on the chopping block.