Has Microsoft secretly lined up new Yahoo board?

The New York Post ran a story today that said no one would step up to be on an alternative Yahoo board on Microsoft's behalf for fear of alienating Yahoo. The TechCrunch blog calls the story balderdash. TechCrunch says that an alternative board is in place, confirmed by a person who claims to be a member.

The reason that Microsoft has stayed mum on the make-up of this alternative slate is that Microsoft and Yahoo are in serious negotiations and close to announcing a deal, TechCrunch says. Microsoft wants to refrain from appearing hostile (by, well, moving in with its hostile takeover alternative board) while negotiating. Citigroup said it expects Microsoft to agree to an increased target price of $34/share, from the $31 per share bid that Microsoft has offered and has declared fair.

If closed-door negotiations are going on, Yahoo is acting strangely by taking steps to make itself unpalatable to Microsoft. Yahoo not only signed on to support OpenSocial, but to lead a consortium to promote it. OpenSocial is a rival data portability standard that Microsoft does not support but Google does. On the surface, that seems like no big deal, but Google aims to kill Microsoft's Office cash cow through its online office and collaboration apps. The ability for users to easily sort through their social networks to find contacts from Gmail (and now, Yahoo Mail) is key to this effort.

The enterprise's interest in the Microsoft/Google/Yahoo love/hate triangle is straightforward. Online office, collaboration and storage represents the kind of SaaS computing you can expect to come barreling into your network brought in by users (and in particular, young grads). As users take their computing off the corporate network and into the cloud, controls such as security, accountability, SoX compliance become difficult if not impossible, to maintain. As users rely on the browser as their "operating system" Windows and its software become less important. If Google's disruptive technology can kill Microsoft, than Microsoft needs to hurt and distract Google by chipping away at Google's revenue stream - Internet ads. Plus, Microsoft doesn't mind turning a pretty penny for itself and its shareholders in the process (not to mention being a controlling force in an emerging computing market).

Microsoft can't just try to squash the onslaught of cloud services, though. It must hurry to repair the reputation it damaged over Vista and to roll out easy to use, understand and INTEROPERATE cloud services of its own. Microsoft is trying, (kinda/sorta trying), with its Windows Live/Office Live Workspaces offerings. Plus, Microsoft is said to be creating another combined version of a software-plus-services productivity app suite, code-named Albany. But it needs data portability to bring users into these cloud services and, in true Microsoft fashion, it won't join up with its main rivals in the area to create a full industry-wide standard. It needs to go it (and control it) alone.

If Microsoft succeeds in swallowing Yahoo, it has gone a long way in controlling all kinds of market forces, from giving Google a painful kick in the revenue-producing gut to, perhaps, getting some real power in the data portability game.

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