Yahoo and Google and Microsoft oh my!

Can anyone keep up with recent news?

Acquisition talk following what seems to be the month of mergers, with Hitwise going to Experian and, of course, Google’s pick up of DoubleClick, brings my old stomping grounds and once world’s strongest brand into the limelight.

Yahoo! and Microsoft

Microsoft is stepping up pursuit of Yahoo! to finally close on a merger or alliance. Yahoo! is worth an estimated $50 billion and a deal between them would raise their share of the search advertising market to around 27 percent against Google’s 65%.

As with the DoubleClick acquisition, I’m anxious for such a change. Disregard for a moment, the financial implication and oft cited “share of the search marketplace;” in my opion, such a merger would establish a new paradigm online. Microsoft is hardpressed to establish a truly viable foothold on the internet and, while Yahoo! remains one of the most powerful and popular online destinations, Google effectively owns search and display advertising reaching into most other web sites. Microsoft does however (much to Google’s chagrin) still own the PC. On the other hand, Yahoo! dominance as a leading portral is stiffled by their inability to extend much beyond that as Google has done with AdSense. We jest about Google’s acquisition rampage yet Yahoo! strikes me as the brand that absorbs what they can’t dominate. Consider, HotJobs, Bix, Flickr, del.icio.us, MusicMatch (now Launch), Kelkoo, Farechase, and Konfabulator (widgets), and let’s not overlook Inktomi and Overture, each now a signifant sub-brand or service. While Google is acquiring companies to add features to their platform, Yahoo regularly consumes well established services to own a greater share of the online world. For them, an acquisition in Search would be limited to vertical companies, which won’t solve the share problem, and they’ve just been dealt a fatal blow in advertising through DoubleClick (Right Media isn’t DoubleClick).

Why not change the game?
As Google becomes online’s advertising vendor, owning both search and display, Yahoo! and Microsoft should make a play to continue to own the most valuable realestate; namely, the desktop and the destination. Google will be a thorn in their side as they develop applications such as docs & spreadsheets but Microsoft brings Yahoo! offline while Yahoo! brings Microsoft on. Microsoft’s Windows Live applications (i.e. Office) need the distribution Yahoo can provide and Yahoo will forever languish as the second search destination with other services increasingly chipped at unless they can extend themselves in front of every new desktop and laptop owner. At the end of the day, there is a lot to be said for Yahoo’s continued dominance when PC owners still have to type in https://www.yahoo.com to get there. Were Windows to automatically direct folks to Y! instead of MSN; their share would exponentially increase.

So what of Google?

or, Why is Microsoft Pissed Off?

I admit, I love keeping track of these developments as the game just continues to escalate. Released at the end of April, but really hitting the media recently, is news of Google’s grabbing the crown as the World’s Most Powerful Brand dropping Microsoft a notch with a brand valuation exceeding $66 billion. Even venerable General Electric and Coca-Cola find themselves scratching their heads as to how such a young upstart can push them aside. In our capitalist economy, its not the value of a brand that wins the game but I assure you, Gates is keeping tabs.