Can Microsoft's corporate culture make room for Yahoo!?

Earlier this week The New York Times published a story by John Markoff and Matt Richtel that pointed out the problems of integrating the two cultures and concluded that the different technology choices the companies have made – Yahoo! is open-source, Microsoft, of course, is famously not – will be the biggest obstacle to success because one company will have to be completely torn down to accommodate the other.

The odds of Microsoft being able to avoid this in Yahoo!'s case aren't improved by its history. In nearly 20 years and more than a hundred acquisitions, Microsoft has hewed to a policy of assimilation. The reasons trace back to the company's first major acquisition, Forethought, the company that developed PowerPoint. according to columnist Robert X. Cringely. He wrote in a 1999 piece titled "Be Careful What You Wish For: Why Being Acquired by Microsoft Makes Hardly Anyone Happy in the Long Run":

Microsoft is not some big, stupid, screwed-up company. It is a big, smart screwed-up company. Part of that screwiness has to do with the way Microsoft manages the companies it acquires. This stems, I believe, from a bad experience in the company's very first acquisition, when it bought PowerPoint. Even though this late-80s purchase was of a company with fewer than 50 employees, both Bill Gates and then-CEO Jon Shirley told me the experience was horrific for Microsoft. It was a problem of trying to merge corporate cultures that were very different. And the lesson learned was not to even try for such a merger. For the sake of Microsoft, the new model says that the corporate culture of the company being bought has to die.

Cringely's immediate subject was Hotmail, the company that invented free, permanent e-mail and was acquired by Microsoft in late 1997. "All we got was money," a Hotmail founder told Cringely. "There was no recognition, no fun. Microsoft got more from the deal than we did. They knew nothing about the Internet. MSN was a failure. We had 10 million users, yet we got no respect at all from Redmond. Bill Gates specifically said, 'Don't screw-up Hotmail,' yet that's what they did."

(If you once had a Hotmail account and no longer do, you can doubtless share some of that pain.)

To be sure, that was a decade ago, and Microsoft has had some time to learn from past mistakes – and it's gotten plenty of opportunity, with with 52 companies bought since 2005, according to Wikipedia. I've got to say, I haven't heard any horror stories. Maybe it has. But if I worked for Yahoo! right now I'd be comparing that acquisitions list to my rolodex and making some calls to find out.