Microsoft and Yahoo! have reembraced the status quo.

So the deal that seemed fated to so many never actually happened: Yahoo! and Microsoft remain separate companies, competitors rather than allies. As I've noted before, I think this is best from the user's perspective. I have a feeling it might be best for the two companies as well; true, there was a chance that the combined entity could pose a serious challenge to Google, but I felt there was also a chance that it could prove the downfall of Microsoft if they mismanaged their newly acquired properties. Personally, I never quite subscribed to the theory that the combination of Yahoo! and Microsoft automatically creates a major Google competitor -- it really would just create a larger competitor to Google in the short run for sure. People unhappy with the ensuing changes caused by the combination could have very well ended up migrating to Google, making Google actually a little bigger than it was prior to the deal. In Microsoft's defense, I will say that they surely viewed the acquisition as just one part of a long-term Internet strategy that would involve much more.

It didn't happen, though. All those bloggers who were so sure a deal would take place were wrong. Many financial analysts were wrong. I realize that I was also pretty wrong to take what those people were saying so seriously. Even though I'm not an expert on business acquisitions, I'm going to take any prediction of an impending deal with a grain of salt from now on. Sometimes, the experts can't really use their knowledge to make good predictions because a particular situation is unusual. Few seemed to consider how much Yahoo! did not want to be acquired and also that there would be some resistance to the deal within Microsoft as well. Understandably, I'm feeling quite skeptical now that the common expectation has become that Microsoft will launch another bid later this year after Yahoo's stock price has declined. This time, I'll believe it when it happens and not a moment before.