Tech Check

Search: Arrogance + Google

I read and re-read the blogpost from Google Chief Legal Officer David Drummond yesterday -- distracted from the Super Bowl by the words on the screen because I couldn't believe what I was seeing. The real clash of the titans was unfolding -- not on the gridiron, but online.

I know Google's got a cute name, and it's got a quirky style of doing business, but whining about predatory Microsoft becoming all-too-powerful and another antitrust threat if its snaps up Yahoo -- when Google itself has been called the Microsoft of the internet -- rings a little hollow for me.

Google will try to paint this as a "David vs. Goliath" showdown. Make no mistake, this is far more like Goliath vs. Goliath instead.

I'm surprised Google issued a statement at all, let alone something that harps on Microsoft for trying to become too powerful in the nascent world of online advertising.

Drummond writes that Microsoft's hostile bid for Yahoo! "raises troubling questions...It's about preserving the underlying principles of the internet: Openness and innovation.

"Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the internet that it did with the PC? While the internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets."

It's an interesting question and an important, troubling issue. But isn't that precisely what Google is trying to do? It owns the online search business. It acquired DoubleClick so it could stake its claim in display advertising and hopefully own that some day.

Google unveiled the mobile software platform Android and is a bidder in the FCC spread spectrum wireless auction so it can some day own the wireless world. It's offering free spreadsheet software online and free email. Google started with one business, owns it, and is trying to leverage that ownership to a slew of new businesses. For Google, that's a strategy that makes sense. But when Microsoft tries to employ the same approach, it becomes the Evil Empire again.

Microsoft hosted its strategic update this morning in New York City: news nuggets coming from the meeting include Microsoft's hope that its deal for Yahoo could close by year-end; that the $1 billion in synergies could be realized by the end of the first year of a combined company; and that despite a massive cash position, Microsoft might seek financing for the cash portion of the deal.

But it was when Microsoft Chief Executive Steve Ballmer was asked about the brewing antitrust feud with Google that things got interesting.

Says Ballmer: "From a regulatory perspective, we think the combination of Microsoft/Yahoo actually makes a more competitive marketplace by establishing a strong number 2 competitor, and any alternative scenario actually doesn't seem to enhance competition and that certainly that would be the message we'll communicate to regulators.

"I mean, Google's clearly got a dominant position. They have about 75 percent Paid Search worldwide; we think this enhances competition. Anything else would be less good from that perspective."

Top marks for Google for playing the antitrust card, but after more than a year of speculation about a deal brewing between Yahoo and Microsoft, you'd think Google could come up with something better; or a little more creative. Heck, Microsoft is trying its best to play the "underdog" card and that too rings a little hollow for me. But that doesn't make the battle any less entertaining to watch, or lessen the stakes for consumers caught in the middle. In fact, it makes it more so.

In this heavyweight web event, if competition is key, Round 1 goes to Microsoft. Let's see what Google, and regulators, come back with next.

Questions?  Comments?