Nightmare on Microsoft Street
Imagine this:
Google (GOOG) starts buying up a series of promising and innovative Web 2.0 companies that Microsoft (MSFT) is either partnered with or clearly is or should be interested in.
It starts with Digg, moves onto, say, Spot Runner and others (Meebo, FriendFeed, iLike and even Slide?), focused especially in the online ad, messaging, online apps and mobile spaces.
And, just to stir up the pot, why not take a gander at some bigger Internet fish? Facebook, for example. Or even eBay (EBAY), which is looking more and more like acquisition bait to me.
It could happen. Some of it will. And sooner rather than later, I would guess.
As Microsoft contemplates its next move in the Internet space after its failed bid for Yahoo (YHOO)–in order to realize its stated goals of being a big player in the ad and search space–it feels to me like it is moving with a Yahoo-level of lugubriousness.
Making some unimpressive announcements (Cash back for search? Now there’s a non-game changer), playing coy with regard to Carl Icahn’s proxy fight against Yahoo and noodling around with plots to buy part of Yahoo, Microsoft has essentially gone radio silent.
And while many smart minds think Yahoo is Microsoft’s only true path to serious competition with Google and should just cut to the chase and make another bid, it seems to be just lazily circling.
Maybe it is actually feverishly working on some amazing and bold renewal of its Yahoo deal behind the scenes, which would be great.
It better be doing something, since it seems as if Google has no intention of backing off in its bid to dominate further what it already dominates.
Clearly, the search giant had no problem getting Microsoft’s face in its takeover battle with Yahoo.
In fact, looking forward at the larger Internet battlefield–which will obviously be almost entirely fought between Microsoft and Google for the next few years, at least (although an unknown force will also surely emerge)–how Google has behaved with regards to Yahoo is instructive.
As Microsoft, forced to make a hostile bid this February after being rejected time and again by Yahoo in 2007, faced even more rejection from the Internet portal, it did not take long for Google to enter the fray.
Its tactics were to be a helping hand, a strong alternative and a flexible partner who could get Yahoo out of its jam by offering a deal that would, of course, help Google too by allowing it the chance to grab another tasty slice of the online search-ad pie.
And to throw salt in Microsoft’s wounds, its top execs then publicly pooh-poohed the deal as anti-competitive, specifically with regard to communications and display advertising.
This, still pending, even as Google’s own possible search-ad outsourcing deal has been quite questionable from a monopolistic point of view.
Now, since Microsoft does not feel compelled to make any kind of significant move, all eyes should be on what Google does next.
So, even if it is a small move like buying a Digg–as BoomTown has written again and again, the pair have been seriously talking with each other for months now, so watch that space–or some other prominent Web 2.0 start-up like it, such a thing would be a clear indicator of Google’s intentions going forward.
In part, that is to keep Microsoft from getting any kind of true traction in Silicon Valley, as it would have if it had managed to purchase Yahoo.
Welcome to Microsoft CEO Steve Ballmer’s nightmare.
So–as Freddy says–whatever you do, don’t fall asleep!
Please see this disclosure related to me and Google.
Comments
Spotrunner ..if scales well is a serious acquisition target for Google and MSFT both . Othere startup to watch for is Admob.com
and slide
but i find it rather strange that you are not thinking of a scenario where a new force might emerge .
Jimmi Wales has some serious ambition with his project like Wikpedia,wikia,grubz ,
Facebook has already acquired Parakey , and they can easily cozy up with Powerset, slide etc [Founder Fund connection ]
I think stage is set for emergence of a third force ..its not a matter of IF its a matter of When .
Posted by Prashant Singh at June 8th, 2008 at 2:38 amI agree it’s interesting that eBay is rarely brought up as an acquisition target, yet has 2 very compelling assets in PayPal & Skype, as well as other smaller entities.
and Amazon is also a candidate, except it would take a lot of Moolah & Mohammad to Move the Mountain known as Bezos. AWS has got big potential & has already stirred Goog to compete with App Engine. not to mention Amazon payments / 1-click buy is the only real competitor to PayPal.
anyway both are quite attractive for monetization, users, cash & key assets. eBay is certainly the more labored of the two, but Bezos has more vision about where he’s going (which prob means he’d turn down any suitors).
Posted by dave mcclure at June 8th, 2008 at 6:10 amDigg can’t make MSFT cool….
Watching Digg group give out free Zunes was highly painful.
It is doubtful that this does anything to make MSFT cooler, instead, it makes Kevin Rose and crew look like a bunch of sell outs. Hawking the warez of the highest bidder, not what is best of breed.
Posted by david zotter at June 8th, 2008 at 9:01 amIt’s all about arbitrage. If Google and Microsoft compete for the same property, Google can afford to pay a lot more.
Oracle has traded on this for some time. They can afford to pay more than SAP.
See why on my blog:
http://smoothspan.wordpress.co.....-is-right/
Cheers,
BW
Posted by Bob Warfield at June 8th, 2008 at 9:13 amHmm… First time I’ve thought this, but instead of buying Yahoo!, you could probably buy up a whole bunch of little startups and essentially have Yahoo! just minus all the traffic, for a fraction of the price. Put them together nicely in a suite and maybe the traffic would come… just wonder who might attempt it first.
Posted by Charlie O'Donnell at June 8th, 2008 at 9:42 amCharlie:
But that’s what the Yahoo deal was all about, buying eyeballs. Not one of the apps mentioned here is rocket science. Google or Microsoft could easily write their own versions (and in some cases have) the trick is to get people to switch once they have gotten used to one thing or another. Yahoo mail stinks by comparison with, well, almost everything, but there are people who have Yahoo e-mail addresses and simply don’t want to go to the trouble of notifying all their contacts of a change. Orkut will soon have caught up with Facebook in features (after inexplicably sitting on their hands for several years) but it is hard to find anyone not in India or Brazil who is interested in using it because the critical mass in USA is already using either Myspace or Facebook.
Remember Microsoft’s strategy when it was still a growing company was to let the applications vendors fight among themselves until there was a clear winner, at which point they would enter into NDA negotiations, make a low-ball offer for the company and if refused, copy the concepts of the target company into a new “free” bundled add-on to Windows.
That’s why nobody in their right mind “partners” with Microsoft.
Google would do well to not copy the MS formula. On the other hand persistence can pay, if you have a better product, and Orkut, Google Groups, Gmail, Docs, all seem to work pretty well together and are each gaining users every day. They don’t have a Digg clone (that I know of) but I bet they could throw one together in a few weeks if they thought they needed to.
Posted by Mac Beach at June 8th, 2008 at 2:08 pm