Google finally went on the record today regarding the proposed Microsoft/Yahoo deal.
In short, they don’t like the idea of Microsoft and Yahoo being one company. They think it raises “troubling questions” and threatens “the underlying principles of the Internet: openness and innovation.” Microsoft is also vilified as engaging in “inappropriate and illegal influence” and having “legacy of serious legal and regulatory offenses.” They mention, among other things, the overwhelming market share in instant messaging and email, and the large number of page views their respective portals generate.
But 2008 may be the year Google can no longer hide behind the “David v. Goliath” defense with Microsoft. Google is the reason that Yahoo has stumbled so badly, and may be Microsoft’s last hope to be a meaningful player on the Internet over the long run. To put it bluntly, the roles are reversed. Google is now the Goliath, and they’re public whimpering on the acquisition makes them look petty and scared.
The fact is that this deal isn’t about email, IM or even page views. In the places that matter – search share and advertising dollars, Google is slaying everyone. 2007 Google search share: 64%. Percentage of all online ad dollars going to Google in 2007: 40% and growing.
The truth is that Google has become the new Microsoft, and if we want to avoid a repeat of history, we need to allow the formation of a real competitor to keep them honest. Otherwise, all the ills perpetrated on the world by Microsoft in the nineties will likely be repeated again, this time by Google.
When it comes to Google standing up to the FCC and the incumbent wireless carriers to make our life better, I’m behind them 100%. But when the complain about the formation of a new entity that can provide them real competition in the search and online advertising space, I’m not feeling the love.
agreed Google is the Microsoft when it comes to the internet. They essentially have the monopoly when it comes to online advertising.
Google = Microsoft
I think google should watch its back and see what else is out their to acquire a stake before yahoo or microsoft do
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“When it comes to Google standing up to the FCC and the incumbent wireless carriers to make our life better, I’m behind them 100%. But when the complain about the formation of a new entity that can provide them real competition in the search and online advertising space, I’m not feeling the love.”
- Definitely well put Michael. Ultimately, “real” competition will keep everyone honest and the ones who benefit the most will be all of us, the consumers.
Google is free to bid…
I disagree. Google has a healthy relationship with everything small. It thrives on diversity. Those who fear it don’t want to be small. They want to be big and dominant, like Microsoft.
Yes Google has control of online Advertising, but you are taking the metaphor out of context and I disagree with this post.
The roles in the “David and Goliath” metaphor are about intent towards the end user, not profits margins.
The villain has been, is now, and after stripping the Yahoo carcass clean and leaving the bones to dry in the sun, will always be Microsoft. Why? Because it is they who tie us consumers to the train tracks – NOT Google.
“Goliath” bullies the people, and “David” stood up against him armed only with a sling. That still rings true since Google using a big part of it’s advertising revenue to provide end user product for little or no money ( and they are great products too ). Ignoring the Zunes DRM, the entire Vista disastar and even the recent abuse of xbox Live Gold members, Microsoft is still “Goliath” because they total contempt their paying customers.
Who else but Microsoft ( with its cohort in pure evil Intel ) would try to run Negroponte out of business?
This is so much fun! Google has every interest in making the acquisition take forever to go through…advertisers will shy away from Yahoo and MS while that happens and land on Google’s lap, brilliant.
I don’t think they are scared, they have nothing to worry about.
Agreed. But honestly, I would trust Google ten times farther with my data then Microsoft.
Of course, there are a lot of things that I would trust more than Microsoft…
I would rather not trust anyone with my data.
So to prevent Google from developing a monopoly (which it doesn’t have, there is still a rather low barrier to entry for advertising, and google is not doing anything to stop anyone from competing except producing a quality product), we should let Microsoft develop another monopoly by buying out Yahoo? This will become a repeat of history, as Microsoft integrates Live into its operating system and tries to buy out or otherwise lock out the competition such as Google from competing, the consumers will all lose. It will be absolutely devastating for competition if Microsoft is allowed to acquire Yahoo.
Google doesn’t want to bid because its only reason to bid would be to prevent Microsoft from buying it, and it would be just as unhealthy for Google to bid on Yahoo as Microsoft. Thats why Google hasn’t. Google hasn’t broken any laws, hasn’t tried to abuse its power, or anything like that. I haven’t felt any pressure to use Google’s products, and hell, even moved away from their ad platform to my own recently. Google didn’t do anything stop me, and still even let me supplement my inventory with theirs until I was able to phase their ads our completely, which I have now done.
As long as one of google’s rules is “do no evil”, I guess I will not fear their growth… but what if they become super powerful and then drop this rule somehow? then the evil will be big and fat!
It’s good to have a counterbalance to their size, and the Mircrohoo conglomerate will do just that. the old fox Gates is still in shape…
uhm, reality check guys… google has always been evil. most of you google supporters forget what google has done to us all so far. and come on dont give me superior products, aside from search they havent done any other superior products. most of their ok products were acquisitions, remember that.
as for them being cry babies, i dont buy it. and for you people calling M$ countless times as having a closed system you have an option not to use it. i for one uses ubuntu, ms vista and os x. i have no complaint whatsover… you idiots have a choice not to use their products. why dont you use linux then? if you answer with because there is no other choice. then you’re an idiot once again.. there are a lot of choices out there, you’re just to scared (and too untrusting to give FOSS products a chance)
back to topic though, good write up mike.
cheers!
WHAT? that google is not doing anything to stop competition?… Try using a competing text links provider to ADSENSE, and your site will be in black list by Google , page rank cero, less web search traffic….
Publishers need this adquisition to go well…
google should buy aol if they are worried about IM and home page views. Its a phase of consolidation. These things will happen. Take oracle’s example. See what they have done in their field. I am for competition but anything that has msft in it, big no no.
The real fear that Google should be speaking about is the desktop — I wrote about yesterday:
http://www.cent...t-about-desktop
Yahoo could certainly help MS in this area -especially in the consumer innovation on the desktop….
Anyone that supports Google as being somehow different and more open than Microsoft is very naive.
All publishers of content and people paying adsense see Google very differently.
Google can easily control page rankings and does to their advantage based on where they make their money. Google is also more than happy to open things up to others when it is in their best interest, like their need to combat Facebook. They certainly also jack up their fees for keywords in a ridiculous way, some non-prime time words for us going from .25 to over 10 bucks in 2 years.
The big problem is that Google can do all these things with little to no oversight because how is anyone going to have oversight on what they do: search, infrastructure for content and ads. They are now even getting into content…
The only thing that will potentially control Google is competition and the combination of MS and Yahoo is the only realistic thing that can happen in the next 5 years that can potentially create the competition necessary to keep Google honest.
Come on people!!!!! Google is just as profit focused as Microsoft or any other publicly traded company. Without competition to keep their fair, what will? Their integrity and desire to be open…ARE YOU KIDDING ME.
I rarely agree with Mr. ego, but Mike is right on in this post.
I agree with you, however, let’s not forget that Google has shareholders who will want to see an attempt protect its core business.
To put it bluntly, the roles are reversed. Google is now the Goliath, and **they’re** public whimpering on the acquisition makes them look petty and scared.
Your spell checker won’t prevent grammatical errors such as inadvertently using *they’re* when you actually mean *their*.
People want to talk about the risk to “openness” with this merger particularly IM & email.
Isn’t it Yahoo and Microsoft that allow you to login through each others platform ?
I don’t agree with characterizing Google’s defensive move as “David vs. Goliath.” Google isn’t Goliath, they are the 2000 lb Gorilla in online advertising. To me, this is a more of a “Mouse that Roared” ploy by Google to generate sympathy from Congress and the public and draw attention away from Google’s market dominance. If Google can put the deal in purgatory via seemingly clever political and legal moves, they benefit from any delay or restrictions imposed by the government. I guess we’ll find out which company – Google or Microsoft – knows their way around Washington and has more friends. In this case, I’d put money on Microsoft based on market share facts and MSFT’s last few bouts with the anti-trust folks.
My instant response to Google’s comment was that they are simply objecting to the merger in the same way that MSFT objected to their acquisition of Double-Click. Payback, but without real substance…
It’s interesting that a long term Yahoo employee sees this issue in terms of Google executing so well, that it has pushed Yahoo into consideration of such a deal. And, if not a deal in actuality, then at least in his mind and others.
http://bizcast....ture-.html#more
I don’t mind your one sided opinion pieces, its good to hear real opinions in this politically correct world. Though this quote is laughable:
“The truth is that Google has become the new Microsoft,”
Yes, Google is the new Goliath and say what you want about them, but Google has not resorted to the same underhanded strong-arm tactics that have been Microsoft’s life-blood.
Not sure which planet one is living in – especially if you don’t consider Google the new Microsoft. Look at the areas that really matter viz. Search market share and advertising revenue.
If you have been following the distribution deals announced over the last few years, you will know how much Google is shutting out everybody else. What Microsoft could have done (tried to do??) by putting themselves as the default search bar, Google has done so by paying obscene amount of money to gain new distribution channel. The rationale, shut everybody out in the short term (2-3 years) and the only search people will ever use is Google’s.
The only way by which Google can be challenged is when someone else’s search market share gains. Search still remains the best way by which the end user communicates the intent and hence remains the best place to advertise.
So, if you are seriously worried about Google dominating and want to do something about it, switch your search engines.
I agree that Google is the dominant player on the internet, in terms of ad revenue and everything else … even though Yahoo and Microsoft have slightly higher traffic rankings.
However, calling Google the new Microsoft implies that it does things similar to engaging in unfair promotion of its products, stifling competition, locking people into its platform, none of which are true. In fact, Google’s mantra is “do no evil.” Right? Is its mission still “organize the world’s information and make it universally accessible and useful?” I’m not sure. But they definitely support open initiatives like dataportability.org .
I think the culture has changed from the 90s, to a more open one. Even as a dominant player, I think Google is winning on public acceptance and the strength of their products, and not uncompetitive business practices.
please stop google, we still have time before it is too late.
I don’t think its the idea of a large company buying yahoo and becoming real competition, I think its more of the idea of MS doing it. If IBM did the same thing, no one would bother to think about it. I’ve read the eula for hotmail, and I won’t have a hatmail addy because of it. I know if ms does it, I’m going to del all my yahoo stuff. Simply because of how MS has treated the world. They don’t make that bad of a product, and if they took the money they spent butchering standards, and put it into development and testing, they’d have a real nice line of products.
#26. You are either very young and naive or old and just plain dumb.
Google is no different than MS, their moves at domination are just has strong armed as MS, but much less observable and subject to documenting.
Google keeps jacking their adsense keyword pricing by over 1000% in less than 2 years and by hitting content providers that don’t play nice with them by downgrading their page ranking.
Google is open when it makes them money. To think that times have changed with the new coming of Google is crazy.
It will always come down to what is best to the primary owners of the company.
Pull your head out Polly Anna!
Google makes image disappear from the Web
http://www.uruk...;size=1&l=e
Pretty evil if you ask me.
What makes Michael Arrington qualified to criticize accomplished businessmen?
Google should make their own bid for Yahoo!
Very well put juan
That pretty much sums it up IMHO
Interesting article and competition is a healthy thing. Looking forward to embracing my Yahoo colleagues should we get the greenlight!
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Scott Barnes
Microsoft.
I think thats just wrong. Google works with advertisers and site owners and makes money by showing relevant ads, its business model is based on collaboration, please compare it to microsotfs. Microsoft is anything but David.
This is a head-fake – a ritualistic protest, when in reality Google is just thrilled at the prospect of “two garbage trucks colliding” in Scott McNealy’s memorable phrase about HP-Compaq deal.
Google still doing no evil? Yeah right…
http://www.goog...acyconcerns.com
David KILLED Goliath. Read the book.
I’m not sure what I think of the MS-Yahoo thing, but I sure know that this self-important Google post annoys me. They are trying to position themselves as some sort of white knight of the web. B.S. I say. Google’s post is 100% self serving. They have very quickly matured into a canny PR and lobbying entity. This G post is nothing more than that – holier-than-though PR bunk. “We believe that the interests of Internet users come first” — Pleeeeeease. G is out to make money just like MS and Yahoo are. And creating smoke screens to prevent competitive threats is what G’s post is all about.
Great post Michael.
It’s rare to see anyone in the valley challenge Google’s intentions.
It’s rare that someone steps back from the widely held belief that companies in Silicon Valley can “Do No Evil” and Microsoft is always evil.
It’s intellectually lazy to lump every market that Microsoft is in together to analyze the impact of a deal with Yahoo on the applicable market. Clearly, Microsoft has not leveraged a monopoly in the operating system market into a monopoly in the advertising space.
Regardless of whether a 75% market share in a market constitutes a monopoly, if you think that Google doesn’t use that 75% market power to their benefit, aggressively and arrogantly, you haven’t sit on the other side of the table from them.
If I were a Yahoo shareholder, I’d want to think long and hard about whether Google really is a white knight riding to my rescue, or the vulture waiting to pick at my carcass when Microsoft walks away.
I’m tired of this “Google is the new Microsoft crap”.
People who say that seem to have no idea of what Microsoft has done to IT in the past two decades. It wasn’t the fact the Microsoft was so big and powerful, it’s what they did with that power that made Microsoft something Google has never been, and most likely never will be, if only because of the enormous cultural differences between the two.
Microsoft is not about “real competition”, Microsoft is all about eliminating competition, making competition impossible. Yes, Google may be able to compete with MicroHoo, but what about the rest of us?
I don’t understand the conflation of size/marketshare with harm.
Google’s complaint, as I read it, is not that a Microsoft/Yahoo combo would be “too large” (in any particular market area), but that Microsoft has a history of anti-consumer tactics that a larger share would allow it to leverage.
This argument seems at least plausible. There is little evidence Google attempts to harm consumers (and much evidence it attempts not to), while Microsoft has a long history of consumer harm.
More importantly, unlike with Windows and Office, Google’s search share (what Arrington says is “what matters”) is not aided by network effects and externalities. A larger Microsoft + Yahoo combo does not decrease the cost of a consumer changing search engines, since that cost is already nearly zero. Therefore, I fail to see how this deal is important to “keep Google honest” even if you’re cynical enough to believe that despite their totally different behavior throughout their histories, Google and Microsoft are actually just as “evil” in their motivations.
Google is hardly Microsoft-like. They have no hold on the millions of computers sold each year. Users may choose to use Google as their search engine and, for the moment, Google’s adwords is king, but all that could change very quickly. Micosoft Window’s grip on the desktop would be more difficult to loose.
MAn, this wasnt an illuminated post! So let’S feel the love for Microsoft-Yahoo combined… but you know what, it other terms it means monopoly. Google hasn’t monopolised search as far as I know, instead users have appropriated it, does that make a difference?
Google is the new Microsoft … Microsoft and Yahoo must combine in order to fight that giant
The issue is how the big company behaves. Microsoft have not changed where it matters (at senior levels). An innovative startup had a meeting with Microsoft v recently and had the same old type of response. “Work with us and nobody else. Or we’ll crush you.” They *do* try to stifle innovation.
I have personally met some more junior Microsoft people – and they seemed much more open and collaborative. But nothing has changed when you get above the lower two or three levels.
Can other startups post their experiences with Msoft at senior levels?
Microsoft has a demonstrative *and proven* track record of anti-competitive practises.
As a result of the culture clash and Msoft’s lack of media friendliness, they are also likely to destroy Yahoo! even if unintentionally. Two or three years down the line the audience eyeball share of a combined Microsoft/Yahoo will most certainly be smaller. Though they might well make more money, the consumer will be worse off.
From Google’s pov, as others have commented, this takeover could really benefit them. The deal size and mismatch of both cultures and technologies will distract both parties for years to come, leaving the space wide open to Google to continue their excellent execution – so long as they don’t also get tempted to do a huge takeover.
I dont want Google to buy MS, the market is much more interesting with more participiants, who fight against each other
I agree with the statement that #6 Debbie Davies made. It really rings true to how Google is making money — small and medium-sized businesses and a whole lot of diversity. While it is true that Google is leading the way with online advertising — most of it has been due to being innovative. With the Internet you have choice, you can decide where to advertise, whereas on your PC, where is the choice with Microsoft?
Completely agree. Google needs real competition.
You want Microsoft to have Yahoo IM, so there can be more competition on the net? That’s the most near-sighet, illogically twisted, and shill-like argument that I’ve heard in a long time.