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| Friday, 08 February 2008 | |
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Struggling software giant seeks near-defunct search engine for US$44bn and... for what exactly? GSOH? Google giggles and the fortune cookies are all over the place.
You must have seen it coming. The Beast of Redmond has long had an uncomfortable relationship with the Internet. When early browsers and search engines stole an Internet march on Microsoft, it’s only response was to steal the map, copy it and copyright it. At this time of year, the Beast is forced to juggle the number of software developers on the payroll for 2008 against the number of lawyers needed to fight off fires now alight in the offices of the world’s competition authorities. Apparently, match-wielding arsonists are not subject to the same level of scrutiny in the belly of the Beast. Laughably, the resulting conflagrations have historically been concentrated within Europe and the US. God forbid that the developing world or China takes exception to Microsoft’s means of ‘managing’ the market. Kung hei... Ahhhhh… perhaps here we stumble upon some of the logic behind Microsoft’s big ticket bid for Yahoo! (we'll kep you waiting, though). On the face of it, one cannot see why a gilt-edged technology powerhouse should trouble itself over a decidedly second rate search company – even if it looks cheap at half the price (in market cap terms, Yahoo! Is now indeed about half its price of just months ago). You’ll recall that the news of Microsoft’s offer for Yahoo! sent Google into a tizzy. It immediately sought to broker third-party ‘white knight’ deals for Yahoo!, simultaneously threatening competition law challenges should Microsoft-Yahoo! go ahead and suggesting that it would be a better partner for Yahoo! than Microsoft might ever be. An oddly public form of corporate panic. You don’t need to be Einstein, or even just plain Albert, to work out that Google has encroached on Microsoft’s turf with its plans for delivering software over the web. Open access to opensource software would indeed threaten the Beast, but that is not yet a reality. You can do it; nobody does. So, on the rather beleaguered principle of ‘getting your retaliation in first’, Microsoft has opted to chase a largely imaginary foe by taking its business to the heart of its arch-rival’s business. That means taking on Google in the search engine business by buying Yahoo!, the latter rendered an irrelevance by Google’s dominance of that search engine business. The painful truth here is that any Microsoft-Yahoo! deal will take a year or more to cement and a few more years to bed down. This, at a time, when Google is surging ahead by demonstrating its need to change and evolve. What a laugh: by the time Microsoft gets it head around this, the world will have moved on. …fat choy Except for the ‘ahhhhh...’ factor mentioned earlier. How does this work? Google has an uneasy relationship with the Chinese market and has been regularly (and rightly) condemned for suspending ‘freedom of speech’ ideals when its network crosses into China. Yahoo! is no better, but it slipped beneath the radar and made a handy financial gain, too. In 2005 Yahoo! paid US$1bn for a 40% stake in Chinese e-commerce site ‘alibaba’; Google has an interest in ‘baidu’, known amusingly as ‘the Chinese Google’ and not much use if you search for a word like ‘Tibet’ or a phrase like ‘gay Olympics Beijing 2008’ either on baidu or its companion, ‘google.cn’ (or on 'alibaba', for that matter). So, the theory here is that while Microsoft and Google pretend to fight each other over online software or search, drawing in the regulators in the US and Europe, they are actually fighting over China. Fanciful? Well, when was the last time that Microsoft ignored a market of 1.3bn people? Jim Chalmers |
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