Microsoft, Yahoo and Their Data Centers

It may take some time for Microsoft's takeover bid for Yahoo to play itself out. Data center executives who lease space to both companies say the takeover battle's biggest impact thus far is uncertainty about Yahoo's short-term expansion requirements. We're also starting to get some answers to the most interesting "what if" questions about combining the two companies' very different infrastructure, including a statement by Steve Ballmer that Microsoft would almost certainly keep running some Yahoo apps on PHP.

On the data center front, officials at DuPont Fabros Technology (DFT) say they don't expect any significant impact if Microsoft (MSFT) and Yahoo (YHOO) were to merge. The two Internet giants are DuPont Fabros' largest data center tenants, accounting for 70 percent of the company's revenue. "Discussions with Microsoft and Yahoo have not yielded any concerns about the current leases or potential expansion," Hossein Fateh, President and CEO of DuPont Fabros, recently told analysts. "On the current portfolio, everything is very long-term. When you look at the future portfolio, it really depends upon the market."

The only leases that aren't long-term are Yahoo's space in DuPont Fabros' VA3 data center in Reston, Va. that expire in 2009 and 2010. One market where Yahoo's requirements come into play is Chicago, where DuPont Fabros is building a new facility in Elk Grove Village, and Microsoft is building a 500,000 square foot data center in nearby Northlake.

"Yahoo may or may not be a tenant in our Chicago facility," said Fateh. "This merger, if it goes through, will probably take at least a year to complete. Microsoft is doing their own data center in Chicago. Whether Yahoo needs space in Chicago or not is probably an issue that will be decided before then, rather than by the merger."
Yahoo has also reportedly considering sites in Dallas or Austin, while Microsoft is building a new data center in San Antonio.

A key issue in any post-merger integration would be the company's different web architectures, as we've noted in our earlier coverage. Microsoft (MSFT) has standardized on its own operating systems and servers, while Yahoo (YHOO) has optimized its operations on open source software, especially FreeBSD, PHP and Hadoop.

At last week's MIX08 conference, Microsoft CEO Steve Ballmer made the most explicit statements yet about integration issues. "We won't have two of everything - two search services, two ad services, two e-mail services," Ballmer told interviewer Guy Kawasaki. "Some of the technology will wind up being from the Microsoft side, and some from the Yahoo side.

"I'm sure quite a bunch of those (PHP apps) will be running at high scale, and for a long time to come," Ballmer continued. "If we own Yahoo, we will be a PHP shop for the foreseeable future, as well as an ASP.Net shop."