Ex-Yahoo Exec: It`s Sad That It`s Come to This

Since Microsoft made its $44.6 billion bid for Yahoo Feb. 1, reaction in the industry has been mixed.

Analysts saw Microsoft's move as necessary to become a challenger to Google in the Internet market. Google predictably opposed the deal, making the argument that the Redmond, Wash, software giant was trying to duplicate online its monopoly in desktop software.

Others saw the deal as a sad sign of Yahoo's fall that could limit competition for smaller publishers.

James Bilefield, CEO of ad-serving vendor OpenAds and a former managing director of consumer and network services for Yahoo, told eWEEK the deal is bad for his business because it means one less source his publishers can go to get ads for their inventory.

OpenAds, which works with more than 30,000 small and midsize publishers in more than 100 countries, offers an open-source alternative to DoubleClick, which Google is trying to acquire for $3.1 billion.

Because OpenAds is neither an ad network nor a publisher, it positions itself as a sort of ad-serving Switzerland, appealing to publishers who want control over their ad inventory and want to decide which ads get shown where on their properties.

Having one less ad network power could create some chaos in the market for these publishers at a time when competitive bidding for the best online real estate remains fierce.

On a personal note, Bilefield, who was in charge of Yahoo's e-mail, instant messaging and community properties until he left for Skype in 2004, said that it's sad that his former employer has come to this. "Yahoo has to do something radical, and Jerry [Yang, Yahoo CEO] being back in charge is a step in the right direction," he said.

Bilefield also defended former CEO Terry Semel, who some analysts have accused of putting the company in its current weak position. Yang replaced Semel in June and Semel stepped down as Yahoo's non-executive chairman Jan. 31, when the company received Microsoft's purchase offer, which represented a 62 percent premium over Yahoo's trading price at the time.

Bilefield said Semel and his team were the right guys to lead Yahoo out of the ad recession that rocked the company in 2000 and 2001.

"He did an amazing job bringing the company back ... Terry was a media guy," Bilefield said. "What didn't happen was an evolution towards a more technology-driven vision supported by the media advertising model, which is sort of what Google does."

Bilefield also said that even with Yahoo, Microsoft will be challenged to evolve from a packaged software powerhouse to a successful online provider of software and services. "Their existing business is extremely powerful, but was built under an entirely different mindset."

Microsoft officials beg to differ. During a strategic update call with financial analysts Feb. 4, Microsoft CEO Steve Ballmer said the company remains committed to broad software innovation and in carrying the torch to become a software-plus-service business.

In this Internet "cloud," as Google, Microsoft and others have come to call it, users will be able to still build on top of an online iteration of Windows, Office and pretty much all of the company's software.