Fortune reports that Yahoo! has restarted talks with Time Warner about buying America Online. The question everybody should be asking is whether AOL wants to sell. America Online has just started working in a new direction, trying to transform itself and set itself apart from other search engines. Even if Time Warner decides to sell, the price tag is not going to be small.
Yahoo! is suffering from the perception that it is the second best search engine after Google, so the company is working hard to change the status quo. Unfortunately, public perceptions die hard.
The acquisition of AOL will give Yahoo! a boost in traffic and stock but it probably won’t change the status quo. At this point Google’s market share is too large to match or beat. It is pointless to waste money on trying to catch up, the public has spoken and the winner is Google. Yahoo! won’t be able to change that in the near future.
However, this does not mean that Yahoo! should give up and sell to Microsoft or eBay. The company needs to change its image and try to emphasize other services it has to offer. Microsoft seemed to realize that with their announcement of Digital Advertising Solutions, service that tries to harness the power of all of Microsoft’s properties, including Windows Live, Xbox Live and Office Online.
If Yahoo! wants to break the status quo, it needs to look inside itself and try to reinvent itself.