So I wonder – can the combination of 2 companies who have independently been beaten like rented mules by Google really compete in search?
The combination would give Microhoo! approximately 30% of the U.S. online search market vs. approximately 65% for Google. Microsoft is arguing that the combination would make the market more competitive. This is an interesting point. Obviously, if done correctly, it would make Microsoft more competitive in search and instant messaging (second to AOL) and a market leader in online advertising and web-based email (Y! mail is already #1). The thing is, I’m not really sure if merging the #2 and #3 search companies makes the market more competitive. I guess what I’m missing is – more competitive for whom?
Search advertising may become more competitive for advertisers by providing a viable alternative to Google, but I’ve never heard of anyone complaining about the cost of advertising with Google unless they have crappy landing pages, irrelevant products, or poor choice of Adwords. Not to mention that anyone seriously advertising their products using paid placement is probably already advertising on Yahoo, MSN and Ask (or at least Yahoo). The other possibility is a chance for reduced ad inventory (depending on how Yahoo and MSN online properties are combined) and increased cost to advertisers (caused by competition for reduced prime real estate), especially as Microsoft attempts to absorb the purchase.
All of that said, this kind of analysis is not my expertise, in my realm of experience, or something that I’ve put in any time researching. The thing about the purchase that stuck out in my mind was the part about competition. If I remember correctly, Google’s success happened during the .com bust, not the boom. Google came out of left field (for consumers) and slaughtered search companies like AltaVista, Yahoo/Overture, etc. Yahoo was around doing indexes and search before Google. Google spanked them like whiny little babies. All this time Yahoo search was getting spanked, MS was tripping over it’s own feet. Basically, Google has already beaten the competition including the two companies everyone is talking about.
Yahoo and Microsoft employ some ridiculously smart people. Many of those people are ridiculously smarter than I am, so it is well within the realm of possibility that they pose a risk to Google’s search dominance in the U.S. That is if they ever really REALLY wrap their heads around what makes Google’s search so powerful.
It seems to me that Google has beaten back all competitors because they did something relatively new. They focused their search on helping users leave Google as quickly as possible hoping that the faster people found what they wanted, the more likely they were to return.
The problem for Microhoo is that Yahoo and Microsoft have never been good at sending people away.
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