Sunday, November 02, 2003

Microsoft Google? Microsoft, the only true monopoly in the world, is reportedly trying to acquire Google, the number one search engine. This takeover, if it is completed and allowed, would have a seismic effect on the computer industry and on world business Google, which was built from nothing five years ago, is one of the rare stories of survival and actual profit ($200 million last year) from the Internet bubble. It was started by two college students, and is now (over)valued at something like $20 billion. The company has announced that it plans to go public early next year. Rumors have it that Microsoft is interested in buying part or all of the company before or instead of that IPO. That would be, relatively small change for Microsoft, whose MSN search engine runs a dismal third behind Google and Yahoo. Google’s big plus is that it has perfected a way of making money from a free Internet service. Its sales of ad space to companies, based on specific search terms delivers focused results for a reasonable price, far better than the scattershot approach of most online advertising. Furthermore, it has managed to sell in a subtle way, unlike the obnoxious pop-up or pop-behind ads that annoy users. That, combined with the speed and comprehensiveness of the search engine have made it by far the leader in this field, So much so that Yahoo, for example, has spent liberally trying upgrade its search engine. As for many people, Google is my home page when I open (Microsoft’s) Internet Explorer. Other than some specialized tools and some games, my time on the computer (and, I suspect, most other people’s) is determined by Microsoft products (Office, Explorer, Windows) and by Google. That’s why people are so afraid of the rumored acquisition. As the gateway to the Web, Google has enormous power. Already it has been criticized by some for caving into pressure from outside legal threats (including from the Church of Scientology) to alter some its postings. The company has also been accused of undermining Web sites that are critical of the company. But, by and large, until now, Google has been seen as pretty neutral and fair. But no one expects Microsoft to be fair. Microsoft is one of the most-hated of all big companies. As Robert MacMillan puts it in the Washington Post: “After all, Microsoft reportedly built its empire employing some of the most steely-eyed, carnivorous business tactics the high-tech industry has ever seen, while Google has come to dominate the Internet search engine space with an unparalleled capacity to play the coy flirt.” The general view is that Microsoft sees Google as its only possible rival. The independent company has the power to become a big disruptor, changing the way people and advertisers use the Internet, and now become one of the top news sites. (Over 70% of the people who find this site, for example, use Google.) It’s become truly international, and it offers a free way to get a (rough) translation of Web pages in other languages. It’s the one factor in the computer world that Microsoft can’t control, ignore, or threaten. The initial indication is that Google will push ahead with an IPO, spurning Microsoft. But that doesn’t rule Microsoft out from buying a major part of the stock – it can certainly afford to. Then only antitrust regulators would stand in its way, and, in the US, at least, that’s no sure thing. 12:25:00 PM

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