February 1, 2008 5:35 AM PST

Open-source silver lining in Microsoft's $44.6 billion wedding vow to Yahoo?

Posted by Matt Asay

Microsoft and Yahoo, together forever. Could open-source offspring be the result?

According to Terry Semel, former CEO of Yahoo, the last time Microsoft approached Yahoo to buy some or all of its search business, Yahoo turned the Redmond giant down. Flat. As for an offer to acquire all of Yahoo, that "conversation has never come up."

"(Yahoo and Microsoft discussed) search and Microsoft co-owning some of our search. I will not sell a piece of search--it is like selling your right arm while keeping your left; it does not make any sense."

But that was then. Now Microsoft has put down a $44.6 billion offer for Yahoo that Yahoo surely can't refuse under present circumstances. Especially since it will give customers a new choice, and Microsoft is all about offering customers choice...or so it says:

Today, the market is increasingly dominated by one player, who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo can offer a credible alternative for consumers, advertisers, and publishers.

Yahoo would be foolish to decline, given its recent travails. What is most interesting to me in all this is how it could drag Microsoft into the next generation of open source.

Yahoo has increasingly been involved with open source over the past year. Zimbra. Hadoop. Yahoo User Interface Library. Etc. Yahoo has been aggressively moving down the open-source road. Would Microsoft help or hinder that progression?

I doubt that it would reverse course. In fact, I suspect that it would give Microsoft a convenient excuse to reverse course on its open-source antipathy and embrace it--at least in the context of the Web. Given how the Web works, with the focus on proprietary data while building on open APIs and open source, Microsoft could both embrace open source and retain its proprietary past at the same time.

I don't think a combination of Yahoo and Microsoft is going to reverse Google's increasing search dominance. As Terry Semel said in 2006:

My impartial advice to Microsoft is that you have no chance. The search business has been formed.

He's probably right. But the real question is whether a Yahoo-Microsoft combination could aggressively outflank and compete with Google in a range of other things beyond search. I suspect that it can.

And open source is one of them.

Originally posted at The Open Road

Matt Asay is general manager of the Americas and vice president of business development at Alfresco, and has nearly a decade of operational experience with commercial open source and regularly speaks and publishes on open-source business strategy. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure.