Google ups the anxiety level
If nothing else, Google's purchase of YouTube has upped the anxiety level at rivals like MSN (Microsoft) and Yahoo. Whatever the wisdom of Google's move or the price it paid, it got an immediate and nervous reaction from its rivals in this new space between search engine, portal, and online advertiser.
So we read in a Reuters report (10/11/06) that "Yahoo Inc. is under pressure to clinch a deal to acquire Facebook.com, the No. 2 U.S. social networking site, to recapture momentum from Google after that company struck a deal to buy YouTube, analysts said on Tuesday." Naturally, that would make Yahoo a direct competitor with News Corp., with its massive and recently acquired MySpace.com social networking site-and News Corp. itself was in the running for YouTube.' Expectation is that FaceBook may ho for around $1 billion.
One Wharton professor is quoted in the Reuters story as saying "It's a feeding frenzy… [there] will be all kinds of other buyers and sellers emerging out of the woodwork." These may include Viacom, MSN, Time Warner (AOL), and some of the cable and telecom giants. Of course, YouTube and Face Book are the only established players, so prices for lesser rivals will b even more outrageous for companies that have never made any profit.
One more proof of how fear of being left out, of missing the next big thing, is a gigantic motivator for mergers and acquisitions. As any parent might ask, "If all your friends drove off a cliff, would you have to do it, too?" The answer is yes, apparently. Enlightened self-interest and rational calculation are not the only factors at work in big business deals.
(Thanks to reader Fernando Alvarez for the heads-up.)
10:09:46 AM 
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