Sunday, February 03, 2008

Why is Google running so scared of the Microsoft/Yahoo acquisition?

A lot of people who should know better are taking an "It's a train wreck!" (it will fail) attitude towards the Microsoft/Yahoo acquisition. Fair enough. But if that is the case, why is Google running so scared? The top item on Techmeme is now a Google Blog post by David Drummond, Senior Vice President, Corporate Development and Chief Legal Officer or Google entitled "Yahoo! and the future of the Internet" in which he opines that:

...Microsoft's hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation.

Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.

Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.

I fully expected that Google "legal" would raise "regulatory" and market share issues, so this is no real surprise at all. The sad thing is that it really highlights how big and bloated and lacking in innovation Google itself has become.

Another thing that this highlights is that maybe Google is really not so big and dominant and scary as a lot of its proponents continuously trumpet.

And on the flip side, with so many of the anti-Microsoft crowd continuously crowing about how Microsoft doesn't really understand the Internet and cannot compete against Google, it is actually amusing to read the Google guard-dog lamenting that Microsoft has one of the "most heavily trafficked portals on the Internet." Give me a break! If Microsoft really sucks, why are they getting so much traffic?

As far as the assertion by Google and others that the bid is hostile, people are making too much of a modest statement in the letter from Microsoft to Yahoo in which Microsoft "reminded" Yahoo's board that they need to act in the best interests of shareholders ("Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."). All Microsoft realy did is state that it would be serious and persistent in pursuing the deal. So far, there have been abolutely *no* hostile acts on the part of Microsoft towards Yahoo. Not a single one.

Here's the good news: Even if the deal were to be scuttled, everyone, including Microsoft's fiercest critics will have to privately acknowledge that they have been dead wrong in their continued assertions over the years that Microsoft does not have any chance of successfuly competing on the Internet.

But back to my headline question, why exactly is Google running so scared? After all, even combined, the Microsoft plus Yahoo search share is a distant second to Google.

Or, is the Google response simply yet another mindless example or the bickering that goes on in Silicon Valley whenever anybody from outside The Valley tries to crash their party?

Geez. What next? LOL... What will "The Next Big Thing" be on the blogosphere debating circuit?

-- Jack Krupansky


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