The Wall Street Journal-20080205-Deal Journal - Breaking Insight From WSJ-com
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Deal Journal / Breaking Insight From WSJ.com
Full Text (518 words)When the Pot
Meets the Kettle
---
Google, Microsoft Slug It Out
On Who Is Biggest Monopolist
As Schmidt Offers Yahoo Help
Right about now, we are betting that Google CEO Eric Schmidt regrets his flip answer at the 2007 Web 2.0 Expo when the organizer asked him whether Microsoft's and AT&T's attempts to derail Google's purchase of DoubleClick were a real threat. "Microsoft?" he scoffed. "Did you say Microsoft and AT&T? What is the year?"
How about 2008?
Google and Microsoft have been filling out the "I'm rubber -- you're glue" corporate file by slugging it out over who is the bigger monopolist. Google Senior Vice President David Drummond asked in a recent blog post whether a Microsoft bulked up by Yahoo could "now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC." Google's Mr. Schmidt has even offered his help to Yahoo CEO Jerry Yang -- apparently willing to let bygones be bygones, as Yahoo was one of the companies pushing regulators last year to block that Google-DoubleClick combination.
Microsoft's general counsel, Brad Smith, last year said the Google- DoubleClick deal raised "serious competition and privacy concerns in that it gives the Google-DoubleClick combination unprecedented control in the delivery of online advertising and access to a huge amount of consumer information by tracking what customers do online. We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online-advertising market."
At the time, Mr. Smith also told blogger John Battelle of battellemedia.com that Google had never been afraid to tug on regulators' skirts for antitrust help: "Eric [Schmidt] was never shy about asking for the government's help against Microsoft when he was at Sun, Novell, or even Google."
So who is the bigger monopolist? Still, point of view is all. While Microsoft maintains that Google's search-market share is 75%, Nielsen NetRatings actually breaks down the 2007 year-end share of the search market thusly: Google at 56%, Yahoo 18% and Microsoft 14%. Google's share rose 10%, while Yahoo's fell 23%.
Google also is the far bigger player in online advertising, with Google selling 40% of online ads last year and Microsoft and Yahoo combined selling less than 25%, according to Susquehanna Financial Group.
Meantime, Microsoft -- despite losses at its online-services business -- is a dominant player in some offerings. For instance, Microsoft has 55% of the Web email market and Yahoo has 25.5%, according to Hitwise's Bill Tancer. Google has only a 5.5% share.
And while Microsoft is just figuring out "behavioral targeting," Google is way ahead in collecting users' information and designing offerings based on that information, according to its privacy policy.
As for world domination, Microsoft has been accused of such desires, but with the DoubleClick deal -- which was opposed by Yahoo, Microsoft and AT&T, among others -- Google seems to have lost a lot of its standing as a rags-to-riches Internet start-up company and is seen a little more as playing for such stakes. Considering the Google Lunar XPrize, perhaps the company's ambitions extend extraterrestrially.
-- Heidi Moore
