Cyberspace has its own jargon and its own signs and symbols. But it is not free from the pressures and compulsions that determine business decisions in the terrestrial sphere. Thus it was inevitable that Microsoft, the software giant, would try to secure its dominance by making a bid to acquire Yahoo. Such an acquisition would place Microsoft in a position to compete with Google, the internet search leader. The first attempt Microsoft made about one year ago was turned down by Yahoo. More recently, Microsoft made a renewed bid, and increased its offer from $44.6 billion to $47.5 billion. This worked out to $33 per share. Again, Yahoo refused to bite the bait and refused to budge from its demand of $37 a share. The negotiations were thus withdrawn, and most analysts felt that Yahoo had probably overplayed its hand. Such apprehensions were confirmed when the very next day Yahoo Inc.’s shares plummetted by as much as 20 per cent.

One reason for Yahoo’s refusal of the Microsoft offer may be its optimism about other suitors. It could think of a tie-up with Time Warner’s AOL, but there it may have been pipped to the post by Microsoft, which is also talking to AOL. An alternative is to look at a deal with Google. Such a match has some obvious legal obstacles in the United States of America. A Yahoo-Google combine would corner more than 80 per cent of the search advertising market in the US, and thus provoke anti-trust action. There is the danger that Yahoo may have put itself in a no-win situation by its rejection of the Microsoft offer. The latter is perhaps relieved that Yahoo spurned its bid. If the deal had come through, a Microsoft-Yahoo combine would have had 29 per cent of the internet searches. This would not be even within sniffing distance of Google’s 59 per cent. The relief has to be set against Microsoft’s inability to counter the challenge of the internet. Through Windows and Office software, Microsoft dominates the global computer market, but it is nowhere in the internet, with less than 3 per cent of the search market.

The new battlefield is the emerging online ad market. The worth of this market is $40 billion and it is expected to be $80 billion by 2010. Among those in this market, Google shares 30 per cent, Yahoo 14 per cent and Microsoft 6 per cent. There are no indications that Microsoft will be in a position to increase its market share. Google, on the other hand, is poised for a big leap after its acquisition of DoubleClick, the online advertising firm. Given this situation, there is a school of opinion that believes that once Yahoo’s share prices have dropped — as they indeed have — another bid from Microsoft is on the cards. What all this makes obvious is that dominance of cyberspace has become the principal challenge before the principal players in this particular realm. It is a space where the most unlikely characters have emerged as entrepreneurs. The market is ever challenging because it is always evolving since innovations provide the cutting edge to the business and to valuations.