Loss of Credibility

3 May, 2008  negotiation

As predicted, Microsoft’s behavior with respects to Yahoo! over the last few weeks was mere posturing.

In negotiation, however, posturing can lead to a loss of credibility, when you can no longer believe that a party will actually do what they say they will do.

So let’s review:

First, Microsoft offers a price. (1/31/2008).

Yahoo! responds. (2/11/2008).

Then, Microsoft says: take the price we’ve by a specified date or we’ll tattle on you to your shareholders. (4/5/2008).

Microsoft affirms that they won’t increase the offered price. (4/24/2008).

The date passed (4/26/2008).

Now it appears that the price has increased.

This is the point, if I was Yahoo!, where I would just sit back and remain silent.

Microsoft is negotiating with themselves to some degree (even if Yahoo! is at the table). By Ballmer’s own admission: “I know exactly what I think Yahoo is worth to me, exactly,” Ballmer told the employees, according to a transcript filed with the Securities and Exchange Commission. “I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done.”

However this plays out, I hope Yahoo! already realizes that as a result of this behavior, Microsoft (in addition to being the 8,000,000,000 lb gorilla) is eroding any customer/employee/shareholder good will that may have previously existed. Sure, we see power plays like this all the time… but not in public and not on this grand of a scale. Ballmer comes across like a kid throwing a tantrum - and the best thing to do for that situation is to just ignore it.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent - namely, reading a contract from start to finish.

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