The headline at forbes.com is Mister Softee Buys Cool, referring to yesterday’s announcement that Microsoft is in the process of a hostile takeover of Yahoo! and all their properties.

So, why is this merger/buyout in the works? Simple: It is all about the Facebook Nation. This is apparently the main focus of the Microsoft plan, as they have been slowly moving toward a greater relationship with Facebook for some time. Have you taken notice of the sea change to the look and feel of Microsoft? As a company, it has finally realized that “square corners” is not selling. Microsoft wants desperately to be hip. It owns the desktop, but it doesn’t own the action/nightlife.

Think of a teenager living in his parent’s home. He uses it as a place to flop, eat and wash. He tolerates his parents yet keeps them at a social distance. Once he has his wings, he is out of there. Apple (nasdaq: AAPL - news - people ) has done a good job at capturing the early adoption of many of the Gen-Xers and now Gen-Y is up for grabs. This is the social generation with idealism.

It’s a good point and it throws the spotlight on something really interesting about this deal: Yahoo! wasn’t at the very top of Microsoft’s to-buy list when it comes to ‘hip’ web properties. What they really wanted, and have been angling for for months, is Facebook. But Mark Zuckerberg - worth billions and one year younger than me (dammit!) - wasn’t playing ball: Microsoft ended up only getting a small piece.

There’s no doubting that Microsoft desperately wants to foster a more youth-friendly image, but I’m not sure Yahoo! will do anything to help that. For the most part, Yahoo! is too big to really seem cool. Some of their properties have the right kind of cred: Flickr is definitely cool. Del.icio.us is pretty cool. Even the Fantasy Sports sites have potential. But Yahoo! Finance and News? The search engine itself? The mail program? These things are nowhere near as ‘cool’ as Google’s products. Plus, there’s not really any “Yahoo! Communities” on the level of Facebook, Myspace or even Digg.

Is it a bad deal? Probably not. If anything, it takes out a major third party in the Battle for the Web, leaving this as essentially a two-horse race. (With maybe Newscorp hanging out somewhere, far behind.) But any talk of the Yahoo! buy giving Microsoft more Gen Y appeal seems a little presumptuous.

Photo by Gnal. Licensed under Creative Commons

Tags: facebook, google, microsoft, online community, social networking, web 2.0, yahoo