Will Microsoft save Silicon Valley from Google?
By Michael V. Copeland and Yi-Wyn Yen
SUNNYVALE, Calif. — There was talk of monopoly in Silicon Valley Friday morning as news of Microsoft’s $45 billion offer for Yahoo spread at Internet speed via e-mail, instant message and mobile phone. But the huge irony is Microsoft’s bid for Yahoo is seen by many here as just what is needed to fend off another monopolist in the making: Google.
“We would prefer to see a healthy Microsoft and Yahoo,” says Geoff Yang, a venture capitalist with Redpoint Ventures and an early investor in Internet-based companies. “But I am starting to get worried about Google’s dominance, and in the absence of three healthy companies, I’ll take two. Competition is good for us, the industry and customers.”
A decade ago, that wouldn’t have been the case as most people in Silicon Valley viewed Bill Gates’ gang as barbarians, taking on, and in most cases crushing, cherished iconic Valley companies like Netscape. No one wants to call it out loud and proud, but the role of aggressor formerly assigned to Microsoft (MSFT) has been taken over by Google’s (GOOG) in the estimation of many of the Valley’s technologists and investors. In the case of Yahoo, Microsoft is more white knight than Visigoth.
By themselves, Yang and others are quick to point out, neither Microsoft nor Yahoo (YHOO) have demonstrated an ability to stop the Google onslaught, but combined they might have the heft to pull it off.
“Putting MSN (Microsoft’s Internet portal) and Yahoo together ought to provide some more scale and more efficiencies so that there is some reasonable competition,” says David Hornik, a venture capitalist with August Capital and another experienced Internet investor. “We could get more of a real marketplace than we have today.”
The hopeful note was also sounded by a number of former Yahoo employees. One of the original Internet companies, Yahoo still boasts the most traffic of any site online, streaming through its portal and various properties. And with additions like Flickr, Zimbra and other Web 2.0 startups, it has kept a strong hand on the content side.
“Yahoo will never catch up with Google in search,” says Paul O’Brien, a six year veteran of Yahoo and the head of marketing at local events search startup Zvents. “They can continue to be a portal, but there is not much room for growth there. But Yahoo is still a sexy company. Combining with Microsoft puts their properties in front of everyone who has a computer. If I were still at Yahoo I would think this is good news, it’s a new opportunity and new blood.”
But feelings were decidedly mixed Friday morning at Yahoo’s Silicon Valley campus in Sunnyvale, Calif. Four hours after the news hit, about a dozen Yahooligans were having coffee and omelettes in the company’s cafeteria and discussing whether Yahoo would accept Microsoft’s bid. Those approached by a Fortune reporter spoke on condition of anonymity.
“This is all anyone’s talking about this morning. But I can’t comment,” said one Yahoo employee, pointing to a glass wall where a group of managers sat. “They’re watching.”
The Microsoft offer follows Tuesday’s announcement that Yahoo would lay off 1,000 workers by mid-February.
Now this. Just how many jobs Microsoft might shed after acquiring Yahoo is a big unknown. Though employees said there had been rumors for some time about a possible Microsoft bid, the timing came as a shock. “I knew the stock price put us in prime selling territory, but I just felt like someone pulled the rug under me,” one Yahooer said.
Some couldn’t be happier as Microsoft’s announcement drove Yahoo’s stock up nearly 50 percent by mid-day. “This is great news, great news,” said one employee who works in accounting. “I’m not worried about my position or finding a job elsewhere, so I’m pretty excited about the stock going up.”
“I’m freaked out,” said another employee who joined the company less than a year ago in a junior marketing position. “I thought it would be cool to work for Microsoft at first, but then I read the letter and it sounded hostile. I’m already worried about the layoffs, and this doesn’t help.”
One worker sighed as she reached for copies of the San Jose Mercury News and the Wall Street Journal. “Just seeing if we’re in the news,” she said. “Ugh.” Behind her, about a half dozen colleagues were at the company’s gym running on treadmills with their eyes glued on CNBC’s updates.
Steve Mitgang, CEO of online video site Veoh, and a former senior vice president at Yahoo in charge of ad products and the creation of the company’s online ad system Panama, is bullish on the combination. “Online advertising is all about being able to understand users in the right context, what they do during their day and their lives,” Mitgang says. “Search is a part of that, but it’s not everything, Google doesn’t have it all. Combining Microsoft and Yahoo gives them the greatest context in the world about what users are interested in. It could be extraordinarily powerful.”
But the big fear among some in the Valley is that Microsoft somehow crushes the thing it most needs in Yahoo, Internet expertise. The smart move, say Valley insiders, is for Microsoft to admit they have failed at the Internet game and let Yahoo become their online presence. “If I were Microsoft I would look to Yahoo to be the lead in figuring out the digital future,” says Hornik. “Not the other way around.”
Im not saying Google is evil. Yes- they are innovative. Yep- software is free. I have noticd though, where we used to find the most relevant information from a search on the first page or two of the results, we now find web sites selling something based ob the keywords. Recently – I did a how-to search on remote desktop. Wjat I got on the first 3 pages was people trying to sell me remote access options and accesories. The how-to info was back on pages 4 and up.
Also- I heard not too long ago, that Google wants to have a camera on every major intersection in America. Coupled with my every keystroke being recorded and saved- its pretty clear that Google wants to be the database of the world. Priveledges notwithstanding, type in anyones name and you get back everything theyve ever done in life. You may even get where they are at that moment.. with a picture of the intersection they are at. Im not saying they are evil though.
Why do people say that Google is a trying to be a monopoly? There are a ton of search engines out there besides Google, Yahoo, and Microsoft. I know that these 3 are the most popular but people can find and use other services if they want.
If you are a person searching for info and an internet search engine is your first and last stop for information, you are very uninformed. The internet can be a primary source but people still need to learn how to find books in the library and scroll through newspaper articles and other older forms of media.
People have been trained go for what is the most popular because it is the easiest to access. But then they complain when they see all of the same info all of the time. People have to seek out alternatives if they want to be well informed. The ability to find and filter through data and information is a necessary tool for all educated and informed people. We cannot continue to allow computers to do all of the work then complain about the results. We have to get back to doing the “heavy lifting” when it comes to searching for info. That may just require not using a computer at all!!!
Wow, I’m in over my head.
Still trying to figure out why and how Yahoo, which came with Vista on my new laptop, one day disappeared as my home page search engine. and was replaced by The Weather Channel.
(Of course, Google remained in the upper corner of the screen.)
Help! The; whatzits are taking over!
Wow. what a complicated mess; only a tech genius could penetrate the forest.
How else to rein in Google before it takes over the world and buys China?
Beats me.
If Google was so fair, why is it that when they see an opportunity to make advertising dollars by competing with an open source service like Wikipedia, they jump on it. People forget that Google will do the same, crush you or buy, if they feel you are a possible threat to their revenue. They are all corporations after your money….get with it.
See, this is a moral paradox. Whether Google is an “evil empire” or not, one cannot deny the fact that Google is the current monopoly, and if it isn’t stopped it will take full control of the internet search and advertising – something illegal no matter how honorable their claims may be. The paradox results from the fact that apparently only another monopoly can hope to defend us from it…It appears as if there is no feasible way to control Google’s antitrust breaching but to allow Microsoft and Yahoo to border along illegal to do so.
Combine a 10yr Alliance with the Following eBay,Amazon.com,Yahoo,AOL,Ask.com,Expedia
Microsoft to combat Google.
Why no complaints that Google is default search provider in Firefox? Firefox also sends page visits to Google for anti-phishing checks. And if you enter a key word on address line, something that doesn’t look like legitimate domain name or URL, Firefox redirects to Google search, even though my default search engine is Yahoo. How much of Google “global search share” is attributable to these indirect searches. I use Yahoo search in IE as well, and IE honors my choice of search engines for keyword searches. IE always sends anti-phishing checks to a Microsoft anti-phishing URL.
Looking at the long term view, this is a process of evolution. Ten years ago Google didn’t even exist and may be gone in ten more. Leaders in the communication area of the technology industry change hats every few years based on new ideas and social behavior. Consider the sway social networking sights have. These websites come out of nowhere and the influence over different segments of the population changes continuously.
Portability of communication will have even more influence moving forward, as people’s lives revolve around their cell phone/IM/computer/TV/music player. The IPhone blazed a new road in the effort to convince people to ditch their home based phones, stereos, TV and even computers for a all encompassing portable communication device.
We can’t always predict how the future will unfold, but it is guaranteed to be an interesting ride.
YourTechWizard.com
I don’t agree with the writer of this article. Google is definitely not an “evil empire” and has done nothing to earn such a malicious title. From the very beginning, google was smart. They made good decisions and the one thing they wanted to avoid was being evil. Even in their early meetings as a company, they would write “Don’t be Evil” on their white planning board as a constant reminder. They are not here to take over the world. They are here to be a good company and make money, which they have handily accomplished and will continue to do. Microsoft on the other hand has ruined and bought out who knows how many businesses to get to where they are now. I guess this is just another step towards Microsoft’s ultimate goal of supreme ruler of the universe.
WOW, less than 10 years ago the article’s title would have been, “Will Google save Silicon Valley from Microsoft?
Are you R-tards really so lame??
You point alot of fingers but i’m betting you never point them at yourselves……
How can a company be evil and monopolistic if the consumer doesn’t use or purchase their products and serivces??
The consumers make the companies successful, NOTHING ELSE!!!
Big lols to the comment ‘…thank god…blah, blah, blah…’
Yea…like some bogus fanatical-mind religions b.s. entity has anything to do with one company buying another…..
It’s the 5 9’s….period….99.999% of humans are r-tards….i’m not used to the fact…but i still know it’s true.
I wonder if MS can build an operating system that zaps the 9ers out of existence…NOW THAT I’D PAY BIG BUX TO INVEST IN!! (even though i’d lose the money because all the money wasting 9ers would be gone)
And yes, the clintons are 9ers…just like you!!!
Don’t try to think you don’t fit the mold….YOU’RE EXACTLY THE TYPE OF IDIOT I’M TALKING ABOUT!!!
Does any of you actually have any life worth living? or is it always gonna be complain, complain, complain, blame, blame, blame, gimme, gimme, gimme??
Pathetic people that inhabit this planet!
The evil empire certainly is NOT Google. Perhaps you meant eBay and Microsoft… those two are in contention for the lead as THE evil empire.
I can’t help but laugh at all the people that keep saying Google is the most innovative company on the internet and their software is free. They haven’t produced anything remotely useful other than search. Their search engine is just an improved version of the old Altavista. The only innovation is they have kept their home page clean unlike Yahoo or MSN that have cluttered the search page with junk news and articles. I am starting to lose interest in Google search these days because it turns up more junk and phishing sites with every search and I hate that puny little ad box called Google ads. Takes a lifetime to load. Not long before Google dies a natural death on account of it’s own hubris.
The key for Yahoo, whomever owns it, is to push beyond its portal to begin earning advertising real estate on high traffic websites outside the Yahoo domain. To do that they need to evolve into a distributor or “wholesaler” of both content and interactive user experiences instead of just a retailer. Providing user experiences to the entire web has unlimited growth vs. growing a traditional portal. The mechanism should be some form of widget-oriented social media platform.
All the talk about Google being a “nice” company seems a bit naive too me. They are in for the money, as every other company. And they do not hesitate to use their cash to bully tiny companies like mine (in Portugal). Example? Simple. I have a small company called IPSense (IP as in Internet Protocol) and I have received a letter from Google laywers, advising us to change names or else… Reason? Too close to “Ad Sense”, Our answer to them: That is NoSense. Get SomeSense.
knee jerk reaction: Microsoft only bad, Google always good. If Microsoft were to store all users web history and IP addresses, read and index users email in order to bring up contextual ads, Microsoft would be bashed even more than it now is.
IT IS THE BEST THING THAT COULD OF HAPPENED TO “YAHOO”. LACK OF LEADERSHIP AND THE FACT THAT MICROSOFT HAS THE MONEY, EXPERTISE ANS IGET IT DONE ATTITUDE WILL MAKE THIS A SUPER DEAL FOR ALL INVOLVED… THE ONLY REASON PEOPLE CALL “MICROSOFT” THE EVIL EMPIRE IS TO GET ON A IDIOTIC BAND WAGON — GROW UP.
“Why is nobody discussing the possibility that Google might make a counter offer for Yahoo, thereby eliminating its only two potential rivals at one go!
Posted By Ananth, Bangalore, India. : February 2, 2008 12:14 am ”
It can’t happen. With Google’s market share regulatory authorities would never allow them to buy Yahoo. It would not comply with anti-trust/monopoly laws.
.
Ananth, Bangalore, India said… “Google might make a counter offer for Yahoo”
.
that kind of acquisition has ZERO chances to have the antitrust authority approval
.
.
.
Microsoft could have more chances to win the Google battle if it buys or merge Yahoo with other #1 wesites like eBay, PayPal, etc.
.
.
Ananth,
Google buying Yahoo would never get the Governments blessing. Definite anti-trust issues. At least with Microsoft, as stated in the article, there are still two large players in the market. Besides, it isn’t so much about the users of the search engines. It is all about the advertisers and marketers that are looking for a more competitive arena. With a “larger” Yahoo advertising cost might just moderate slightly and they could play Yahoo off against Google in negotiations.
I believe it is highly unappropriate and quite misleading to label Google an evil empire. It is a firm that has been successful on its own merits, by taking risks, playing the game out of the box. In contrast to Microsoft, Google has not engaged in anti-competitive, and possibly illegal practices, to achieve its growth. Now, having attained a dominant market position, the label evil empire is a cheap shot at a great company. The have lived up to their motto: Don’t be evil, which is more than one can say for Microsoft.
Microsoft has been evil for years, either consuming or squashing its competition. To my knowledge, Google has not stomped out or bought out any of its competition. It looks to me like Microsoft is playing the same game, and I doubt that its going to stop Google anyway. Maybe Yahoo! will break Microsoft in a way that will make it dissolve like I have been dreaming of for at least 10 years.
The Internet has revolutionized society and our access to information.
Google is close to monopolizing searches for information on the net.
Add those two facts together and you’ll see that one business corporation has fantastic power to skew the worldview of the planet, whether they choose to or not. How data is indexed and prioritized affects which information we see and don’t see. What information we see affects which information we act on.
Google has the power to skew the worldview of the planet in ways that we wouldn’t even notice. Casinos make money because the odds favor the house and over time even a small odds advantage adds up to consistent, abundant profits. An election is often won or lost by small percentages. Google is in a position to keep certain information from easily surfacing and emphasize other information if they choose, however subtly.
Who controls Google and how they control Google directly affects what the world sees. If the intelligence agencies of the United States don’t realize this fact, they aren’t doing their jobs.
It could be, for now, that the good people at Google are full of integrity and good will for all. Their informal motto after all is, “Don’t be evil.” Can we count on that forever? In 2006, Google made an agreement with the Chinese government to self-censor search results.
They say that absolute power corrupts absolutely. The law acknowledges that a monopoly on any product or service is a danger to the welfare of the people. How much more dangerous would a monopoly on our access to information be?
The ability to control what information we find and don’t find is a powerful enough issue to warrant concern, but the flow of information goes both ways.
According to Googlonymous.com:
“When you search on Google, your ip address and the time are stored in their database forever, as well as the subject searched. This information can be used against you in the court of law. Google will willingly allow authorities to consult their database…”
Forget warrant less wiretapping, Internet searches are infinitely easier to search and catalog than phone calls. If the intelligence agencies of the United States don’t realize this fact, they aren’t doing their jobs.
For better or worse, the Internet has become the collective brain of the planet. Google has become the power of memory for that brain.
The world community would be well advised to be sure that Google has competition, preferably in some open source, community managed format.
Will the Yahoo-Microsoft a good rival to Google and win some of the market share or another substitute would emerge?
If you may recall Yahoo was the dominant leader until Google started to innovate that attracted more users to their http://www.google.com. Google was the best substitute (and still is today) they never stop doing and innovating. What raises the bar for new entrants and competition posted by Yahoo-MSFT is the LEVEL of innovation that Google has been providing FREE to users.
Microsoft may not anymore apply the strategy they did for Netscape when they, Microsoft, bundled their own Internet Explorer free on Windows operating system. Price no longer dictates the positioning for Search tool.
What Microsoft maybe looking at now is limit Google supremacy to searching for content on the Internet and grab more of the pie of growing desktop content searching with Google for Desktop where Microsoft business really is – the Windows.
To Robin:
How quickly you forget… Google forced Microsoft’s hand not the other way around. Microsoft is a CONVICTED MONOPOLY and CONVICTED CRIMINAL company who bribes politicians and buys governments openly.
Do you REALLY think Google is worse? Are you truly that naive?
Microsoft needs to go, not Google.
I agree that google is dominating the web. It is nice to have competition, some other engines out there that take different approaches to indexing the web. It makes it easier to find things if there is more competition several approaches to a task.
This video I saw on youtube expresses the problem with the monopolized internet fairly well.
Unlike Bill Gates Google founders are real Engineers. They didnt steal anybodys code or sell someone elses product in their packaging.
Only low level scum like gates can go to the lows in life that he went. Deep down Gates knows he is only a brilliant marketing guy best in packaging and nothing else. I think that insecurity drove him to do all the evil things he did.
History will judge bill as Dr. Evil, if it has n’t yet. All the billions and philonthrphy cannot disguise that fact.
Why is nobody discussing the possibility that Google might make a counter offer for Yahoo, thereby eliminating its only two potential rivals at one go!
i dont think this was such a smart move by microsoft.first of all,its to much money for yahoo,i think yahoo is worth maybe 28 billion,i think 45 billion dollars is a bit out of control.its insane for microsoft to be paying 45 billion for yahoo.but if they can afford it,why didnt microsoft invest in verizon fios since they offer msn premiere on dsl thru verizon anyways.because microsoft and verizon couldve teamed up with the best fiber optic digital all for highspeed broadband and tv.but comcast stock has tanked alot lately,why not get involved in something like that.but beyond a reasonable doubt,google is the best search engine on the planet,but microsoft has a pretty good search engine and so does yahoo,if you type in a word or phrase in anyone of those 3 search engines you will come up with the same results in all 3 of them.so why waste 45 billion on yahoo when microsofts search engine is getting just as good as googles,and pretty soon it will be better as long as they keep making it better.
FINALLY! Some of these wimps are coming out and saying what a lot of people know in the industry — GOOGLE IS EVIL. They portray an image of purity and angelic nature, but on the inside they are a secretive, monopolistic, ruthless, and hypocritical company. They are driven entirely by greed — to take over the ads business which they have been telling the world is many times bigger than the software business so they could evade comparison to Microsoft. Meanwhile they walk all over their partners and customers, silence their critics by deleting their accounts, and pursue ruthless secret deals behind their employees’ backs (YouTube for starters). Google is indeed the new monopolist and thank goodness the US Government didn’t completely kill the only company that has the resources to challenge it, even if it meant that company had to deplete its cash reserves to halt the evil juggernaut of Google. Good for Microsoft for taking this bold move. I hope Yahoo will support this and combine forces with Microsoft to finally put a more level playing field out there in the internet.
Do no evil? Give me a break, Google, now the world will begin to see the real colors you have been faking all this time.
Let’s see how many Google employees stick around after the stock takes dive after dive. Fortune had it right in their article last year to ask this question:are Google employees happy because their stock is high or is the stock high because the employees are happy? Now the next chapter will unfold as we see that it’s really the former and Google management will scramble to try to make employees stay on since they know it’s really about the stock for the majority of the employees who joined in the last 4 years. This will be fun to watch.
This is funny. I’m a progrmmer and quasi-geek. I was surveyed at work today by an overseas, barely-speaking-English lady about how much credence I give to professional analysts, consultants, and media reports. Question by question, I answered honestly and negatively. And now this.
I disagree with the headline and the writer’s point of view.
Microsoft is bad. You might think that things have changed since the 90s, but I assure you that Microsoft knows it’s roots. They know that a monopoly is critical to their business model, and this acquisition is an attempt to regain that monopoly. Google might be approaching a monopolistic status to the outside observers, but they’re nowhere close to what Microsoft was and wants to be again.
Google, relative to Microsoft, is a patriot in the battle between these monster tech companies. They don’t charge you a monopolistic price for their services. They don’t sue companies for using competitor’s products. Most importantly, they don’t fight their war on your privately owned, personal computers.
Evil or not, this is the way the world works. Everyone thought standard oil was evil until you really look at the facts ( given we only looked at them in the last 20 years so maybe time will tell ) so I look at MS, yes they are ruthless, but they keep on bring on products and have, brought the prices of pc’s down, cost of enjoyng your pc down and somehow added to most peoples lives.
I think its a gift from GOD for yahoo shareholders. At least now they can get out of this ever losing investment at fair price. This may also be considered as “Melinda Gates” charity for YAHOO employees/shareholders.
I guess you people have heard the news by now that I am buying Yahoo! All of my denials over the past year were not lies they were strategic postulations! In other words, I knew that the politicians would be talking a recession into existence one year before the general election which would drive the stock price down, when it hit the low yesterday, I made my move!
$44,600,000,000 for Yahoo is a steal!
Any large integration process with Yahoo has risks associated with it, I know we’ve all thought about it. We could have hired more engineers, but the market continues to grow and the leader (Gaggle) continues to consolidate position. There’s nothing like the chance to put together two large engineering organizations. A good integration actually should be quite an accelerant to progress.
In other words Google, be afraid! Be very afraid! Muahahahahahaha
BallmerSoft Begins!
It’s great to be CEO!
Google has done nothing to deserve the evil moniker unlike Micro$oft.
Google is simply the most innovative company on the web – they have not not killed any competition, their software is free for most users, and in general they have made the internet more useful for ordinary users.
Competition is good but everyone knows the lengths MSFT has gone to eliminate competition before. So there is still only one evil empire in the IT world and it is not Google.
- Nintendo Wii officially recession-proof
- Kosmix searches for a new way around Google
- Report: Former AOL chief wants to buy Yahoo
- Phone forecast calls for sales decline in 2009
- Hewlett-Packard solid, Corning shattered
- The Xbox 360’s holiday makeover
- Yahoo CEO Jerry Yang to step down
- Mark Cuban faces insider trading charges
- Silicon Valley celebrates do-gooders
- Microsoft gives Windows Live a Facebook facelift
- I just went through a nightmare with ... More
- In 1998, somewhere around there, my n... More
- Bob, I'm sure someone in your office ... More
- Guess I'll join the chorus; without a... More
- dudes..really nice discussion going o... More
- I'm so glad that we we are working to... More
- But the PS3 has better graphics, crap... More
- people just wanna forget about d bad ... More
- This link will take you to a "memo" t... More
- Dude ;;;;;;;;;;;;;;;;;;;;;;;;;;;... More
I am sorry but the only monopoloy here is a monopoly of good service. Google is only owns the market share because they provide a GOOD SERVICE. If microsoft and yahoo provided a service BETTER or EQUALING google’s then they would not be frightened of them.
Common sense.