What Microsoft's Bid for Yahoo Means for the Economy

Microsoft recently made a $44 billion bid to acquire Yahoo. This is a unique situation, for aggressive takeovers generally occur close to a top--when buyers are very optimistic--or after a bust, when survivors pounce on opportunities to pick up companies inexpensively. But with Google's disappointing earnings report, the deal making points to a new phenomenon: the first economic slowdown of the recent internet era.

But these two events-- Microsoft's ostensibly hostile bid and Google's disappointing earnings report--coupled with the Audible-Amazon merger can be pegged in part to broader economic trends. Investors (and executives) are worrying that the secular trend of rapid growth and rising profitability for Web 2.0 companies is running into the brick wall of the business cycle. Over the past year, the slowing consumer has dragged down a chain of sectors—from the homebuilders to department store retailers. Now it's the turn of technology companies.