The New York Times reports that Microsoft Corp. (NASDAQ: MSFT) and Yahoo! Inc. (NASDAQ: YHOO) are in serious talks about a merger. This report is different from the previous ones because there are no substantive leaks about the details of the talks - such as the price.
This could mean that these discussions could actually result in a deal. Although, the Times does report that one of the anonymous sources said there was a 50-50 chance of the deal going through. If a deal is done on a hostile basis, the odds are greater that Yahoo's most talented people will leave. If a friendlier deal is negotiated, the result could be a more cohesive organization.
But here's the thing that bothers me about all this. It would be quite difficult to combine the cultures of these two very different companies. And if a deal went through, competitors -- such as Google (NASDAQ: GOOG) would take advantage of the confusion going on within the firms to poach customers. By the time the combined company had its act together, Google might end up taking a healthy chunk of their advertising market share.
And I thought gaining market share was the point of Ballmer's move. Meanwhile, if "friendly" talks fall apart between Microsoft and Yahoo, Google and Yahoo are likely to follow through with a broader Google deal.