Looking at the proposed merger of Yahoo and Microsoft I am reminded of the merger of Time Warner and AOL.

I worked for Netscape up until 1999 and saw Netscape get swallowed up in AOL and then the merger of two huge companies. It didn't work at all. In fact very quickly the Time Warner people wanted their old shares back. It still hasn't worked and the share price will never get back to its old levels.

Another example was the HP Compaq merger, while it has worked out ok long term it slowed them down for the first couple of years.

If the deal goes through it is inevitable that someone will pay the price, whether its Yahoo or Microsoft it will most probably be in some way the shareholders. Pulling the two companies together will take time, time that Google will enjoy. If you take two large companies that can't beat Google, I don't think putting the two of them together makes a company that can beat Google.

Also, the ethos at the two companies is miles apart right now. Yahoo runs on Open Source and champions open source projects, I don't have to mention how MS sees this hippy stuff.

If you look at this deal in light of the level of cash that Microsoft has left, it looks like a huge gamble to get in on the internet game by Microsoft. One that I can only see backfiring.