Microsoft

Apparently, Yahoo is trying to douse itself with some "Microsoft-repellant" in joining Google's OpenSocial allance and forming a non-profit OpenSocial Foundation with Google and MySpace.

While Yahoo's OpenSocial press release never mentioned Microsoft, the impetus for this change of heart by Yahoo was clearly a way to "dis" Microsoft and make Yahoo marginally less attractive to Microsoft.

Google's CEO Eric Schmidt must have an extremely dry sense of humor.

• He recently told reporters with a straight face that: "We would be concerned by any kind of acquisition of Yahoo by Microsoft"... "We would hope that anything they did would be consistent with the openness of the Internet, but I doubt it would be."  
  • This guy could win "Last Comic Standing!"
  • Give him an Oscar! an Emmy! any acting award for communicating that Google's deep heartfelt concern is only for the Internet and its openness.... and of course for "the children," rainbows, puppies, Moms, apple pie and all humankind....
    • Google has now transcended any self interest at all in a Microsoft-Yahoo hook-up... they have become virtual goodness, wholesomeness, and cookie smells.. in all that they do...  ooooooohhhhhhhmmmmmmmmmmmm......

New evidence exposes that Google has much more serious financial conflicts of interest and is much less of an "honest broker" of online advertising than most appreciate. 

In reading most all the major press reports on the Microsoft-Yahoo bid, there has been plenty of reporting on the personalities, the price and the process, but precious little analysis of the core assumption whether Yahoo truly has a credible alternative strategic option -- in outsourcing its search to Google. 

• One can't get a true handle on the likely endgame of this transaction without a more rigorous testing of this outsourcing pillar assumption:
  • Is outsourcing Yahoo's search function to Google a viable and real strategic option given recent antitrust concerns?
• No. Upon close examination of the facts, this alternative is a weak bluff by Yahoo at best -- designed to buy time and create the perception that Yahoo has more maneuvering room than Yahoo really does.

Would antitrust officials allow Yahoo to outsource its search function to Google? Highly unlikely. 

Kudos to Kim Hart's dead-on insights in her Washington Post article: "Some Businesses at Mercy of Google See Hope in Bid." 

• Forester research analyst Shar VanBoskirk: "There does seem to be an attitudinal shift," she said. "Two years ago, Google was everyone's salvation," because it enabled small Web site owners to easily make money by selling ads, she said. "Now people feel like it has too much control. They may prefer to work with a player that doesn't have as much power in the market."

• "Google has the edge right now. Its unmatched reach on the Web, both through its dominant search engine as well as its large base of advertisers and publishers, has allowed it to wield so much power that it can shape markets, anoint winners and declare losers, and set prices for advertising, leaving customers like Davies feeling they're at Google's mercy."

 Well said. Enough said.

Since the beginning of the year, Google's stock has fallen over 25% -- about 2-3 times the fall of the relevant indexes.

• The good news for Google shareholders is that most all of Google's stock price problems are self-inflicted, so they could fix them -- if they wanted to.
• The bad news for Google shareholders is that Google is unlikely to change its problematic bahavior -- because "leopards don't change their spots."

Why is Google its own worst enemy?

First, Google routinely alienates its friends and allies.

Google must have been caught off guard last week by the Microsoft-Yahoo bid because they are reacting quite rashly and arguably in a way that is not in the best interests of their shareholders...

First, is it wise for Google to be proactively and angrily  "kicking the antitrust bee hive" in the U.S. and in Europe when their DoubleClick acquisition is still pending with EU regulators?

• Did it ever occur to Google that they could take the close call in the EU over their pending merger -- that previously was trending in their favor -- and give opponents of the deal in the EU -- more ammunition that this market is too concentrated and that antitrust officials should be more concerned about this market?
  • Has Google forgotten that they have 90% search share in Gemany/Spain and 75% share in France/UK? 

Second, in leading the charge against Microsoft-Yahoo in Washington, has it occurred to any adult in Mountain View that this will only accelerate Washington interest and attention to adopt the FTC's (5-0) proposed behavioral advertising privacy principles/regulation, which would require opt-in and "affirmative express consent" before Google could use "sensitive data."?

I can't say I'm at all surprised to see Microsoft seek to acquire Yahoo. 

• It makes obvious business sense for both Microsoft and Yahoo -- because it is the only viable and timely strategic option for either company to become a serious and credible competitor to Google-DoubleClick's rapidly increasing dominance of search and Internet advertising.
• And given the FTC's surprisingly-strong consolidation-endorsing analysis of the Google-DoubleClick merger -- a previously-perceived yellow antitrust light to such a merger by Microsoft -- now has a bright blinking green light for approval.
  • Timing-wise it's obvious to Microsoft to get approval now while the getting is so good.

So what are the implications of Microsoft losing its antitrust appeal in the EU's Appeals court -- which was a page one story in all the major papers?

More and different than most may think.

The EU is signalling in it's harsh treatment of Microsoft, that the EU is going to be tough on "dominant" firms. 

The antitrust relevance of yesterday's New York Times reported quote: " ...marketers increasingly want to combine their purchases of search and display advertising." has really quite profound implications for the pending Google-Double-Click deal.

What that quote does is zero in on what really matters to FTC antitrust authorities -- how would the transaction actually change the current competitive dynamic, or more specifically, how would the merger "substantially lessen competition," which is the legal standard for approving/disapproving mergers.