When Yahoo CEO Carol Bartz suggested yesterday at the D7 conference that she would consider doing a deal with Microsoft for “boatloads of money,” she might have been doing more than just answering a hypothetical question. It could have been an opening salvo. If the late-night buzz I heard at the conference is correct, Bartz is meeting this morning with Microsoft CEO Steve Ballmer, who is also at the conference and is due to be onstage today. The two started talking in April about renewing negotiations between Yahoo and Microsoft over a search and advertising deal.
Last summer, Yahoo rejected Microsoft’s offer to buy its search business after earlier talks to buy the entire company also fell apart. But that was before Bartz became Yahoo’s new CEO in January. By March, Ballmer was publicly begging Bartz to come back to the negotiating table. When Bartz was asked yesterday if the two were talking, she said, “Yeah, a little bit.”
If Ballmer wants to get anywhere with her this morning, he had better bring more than just a boatload of money. Bartz also made it clear yesterday that the data produced by Yahoo’s search engine is crucial to Yahoo’s overall advertising business and to improve its consumer properties. But she also signaled that she is more open to a search deal than she was when she first took the job:
We went from ‘we will never sell it’ to ‘if they have the right idea.’ There are two parties in all of this. The other party has all the money, we have the data. It is not like a big secret what happens when you do a deal.
When it comes to winning in search, money is no object for Microsoft. Ballmer is expected to unveil a brand new version of Microsoft’s own search engine this morning, internally dubbed project Kumo (possibly to be branded Bing). Microsoft is reportedly planning on spending $80 million to $100 million on just the marketing campaign for Kumo/Bing. It is the data-sharing discussion which might be the stickler. So don’t expect any announcements today. But at least the two sides are talking again.
Update: Walt Mossberg asked Ballmer ontsage today, “Have you met with Yahoo recently?” Ballmer tried to dodge the question, replying: “I don’t have to answer it. I can talk about the new Zune HD.” Then he spoke in generalities about how there could be a search partnership if it makes sense. Mossberg pressed him again, and Ballmer took the easy way out, telling Mossberg, “You were at the meeting. I went into the green room to get ready. You saw it.” Bartz had left a note for Ballmer in the green room joking that “the makeup couldn’t fix me if it tried,” says Ballmer. Sounds like a love note to me.