I blogged about the Yahoo/Microsoft deal on Friday at Comment is free, so won’t go back over what I said there, except to say there are lots of reasons why this is a bad idea.

Charles Arthur, on Newsnight that day, also made good points* about (i) Microsoft using up all its cash pile – and more – to do this deal and (ii) Yahoo eventually being forced to change its technology to Microsoft’s, which will prove a huge distraction.

Reflecting on this over the weekend, the distraction factor may be the biggest hurdle for any new Microhoo. Whether or not they decide to integrate systems, bringing together two large companies with their different cultures and geographical locations will be tough. Finding that $1bn of savings will mean a lot of Yahoos and Microsofties losing their jobs, which is never good for morale. And the whole thing will happen under the cloud of a recession, and with the background noise of investors quickly getting more anxious for payback.

One thought: imagine you’re a developer, or junior or middle manager in Yahoo, and you’ve got an idea for what you think is the Next Big Thing. What are you going to do with it? Hang on until the takeover dust has settled, and pitch, in the hope it’ll even get noticed let alone successfully launched? Or spend some time in the canteen concocting a plan to breakout and go do a startup with your fellow employees?

The last dotcom slump produced a wave of productivity, as laid-off employees clubbed together and did creative things on small budgets. That creativity has waned in the last year or two as the money ploughed back in. So maybe the Yahoo/Microsoft collision will see the talented jumping ship first, powering the next bout of innovation. Bad for the new behemoth, great for us. Ho hum.

* Did Robert Scoble look as if he were constantly reaching back to the glory days in that Newsnight appearance? “I told Bill” this and “I advised Microsoft management” that? I’m told Scoble is a nice guy, but since leaving Microsoft the “Scobilizer” appears only to be marketing himself whenever he shows up online, on TV, or at a conference. This is a drag.

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