Google Weighs In On Microsoft's Takeover Attempt

This morning's Wall Street Journal contains a feature story on Google's self-insertion into Microsoft's bid to acquire Yahoo, about which I wrote here on Friday.

Rather than wax extensively about the various moves and counter moves, I'd like to dwell, instead, on the tremendous amount of bile and misinformation flowing around this event.

First we have Google disingenuously claiming that Microsoft's acquisition of Yahoo would dangerously concentrate 'competition' in the sectors affected. According to the Journal,

"Google identified instant messaging and Web email accounts as areas where a Microsoft-Yahoo combination would have "an overwhelming" market share. In the blog post, Google also questioned whether Microsoft could use its "PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, [instant messaging] and Web-based services." "

Is Schmidt nuts? How can there be a monopoly of free goods or services? Nobody in their right mind has to pay for 'instant messaging and Web email accounts' anymore. Nobody.

So how in the world could Microsoft and Yahoo somehow collude and monopolize this product/market? Where's the beef? Ad revenues? Google already controls that market. Adding the second and third-rate online advertisers' revenues from their own IM and email systems can't possibly worry Schmidt and Google.

Then we have Ballmer claiming that the combination will bring more 'creativity' to the sector.

Really? How's that going to happen?

Let's think about this. What is 'creative,' in this context? You would think that 'creative' would involve developing a truly new, non-imitative product or service from Microsoft.

Instead, the firm simply proposes to buy a failed quasi-competitor. Nothing created there.

Why isn't Microsoft using the roughly $25B premium it's willing to pay for Yahoo to develop truly creative products or services?

Probably because Ballmer (and Gates) failed at this, post-Office and Windows systems, for the past decade. They've bought businesses, like WebPC, that vanished into the giant maw that is Microsoft. Their MSN network has struggled constantly. The browser war 'victory' was hollow, in that it brought no added revenue, but alerted anti-trust regulators everywhere to Microsoft's predatory approaches.

All that is being 'created' in the Microsoft acquisition of Yahoo is the consolidation of eyeballs into the online websites of one, rather than two, firms. If Microsoft could better ad-related software, wouldn't they just do it, for less than $25B? Or already deploy it to MSN?

If Yahoo's system was so good, would it be in such trouble now?

How would combining two mediocre ad revenue systems, and their creators, magically introduce 'creativity' into that product/market?

Google's supposedly friendly gesture to Jerry Yang is the predictable result of Schmidt's animus toward Gates, Ballmer and Microsoft, as Dennis Kneale theorized, and on whose theory I wrote, here.

Ballmer's (and Gates') Microsoft's bid for Yahoo is, similarly, aimed at their nemesis, Schmidt and Google.

The reality is that Google has already won the online ad revenue and search wars. They really don't need to harass Microsoft anymore, or worry about who would be so bereft of their own ideas to have to buy Yahoo to get new ones.

And Microsoft is simply past its prime. And will stay past its prime. Buying Yahoo won't change that. If anything, I believe it will hasten the software maker's decline.

Simply put, what could Yahoo have, of value, that it can't already monetize? What, of value, could it bring Microsoft that the latter can't get for less than the $25B premium?

The more this deal circulates in the media, the worse it looks for Microsoft. And the worse Google's reaction looks.

The only winners, I maintain, continue to be the suffering current shareholders of Yahoo.