Is It Time For Google To Worry?

Google sure would like us all to believe that its dominance is now facing a real threat from Microsoft , Yahoo , and any number of also-ran crumb-eaters trying to stake their claim in Search. A "competitive threat," you see, throws off the Federal dogs sniffing around for a possible anti-trust case against the world's biggest search engine.

But before you scoff at the idea that Google is untouchable in the space, consider what's been going on with its biggest competitors, notably Yahoo and Microsoft.

Here at the Yahoo annual shareholders meeting in Santa Clara, Calif., investors seem to feel emboldened by a new sense of Search self. CEO Carol Bartz, who meets investors for the first time today in her new role, has injected a kind of feisty, fiery financial panacheto Yahoo, and with shares up about 25 percent since she took over, the language is more than empty rhetoric.

She'll continue that message today, accentuating the positive, and once again, beat the drum that Yahoo is far more than merely Search, but a destination portal with commanding eyeball traffic and rich content that keeps those visitors coming back for me. It's a message that got lost at Yahoo for years as the Terry Semel regime wound down, replaced by a co-founder in Jerry Yang who nearly unraveled his entire legacy because of the blinders he was wearing in the boardroom.

So Bartz breezes in, begins to clean house, is prepping for a wholesale re-branding effort of the company, and is talking tough about a possible tie-up with Microsoft. (She won't sell off the family jewels unless it's for a "boatload of money.")

Microsoft is no slouch either, thanks to its new search engine Bing. Laugh at the silly name all you want (remember when Google was silly too, before it became a verb and a profit center that rivals many global economies?), but Bing is actually capturing a little market share. And that's all CEO Steve Ballmer wanted to do, as he told me a few weeks ago. Incremental market share, chipping away at Google, and over time, the pebble down the hill becomes a destructive snow ball destroying everything in its path. OK, hyperbole (or wishful thinking?) but a glimmer in Ballmer's eye.

And like Yahoo, it's that hopeful approach, along with key execution that's exactly what Microsoft needs. The company's online business continues to bleed red ink even after a decade of start-and-stop internet strategies. It is desperate, and may not be able to afford the slow-and-go strategy Ballmer is mapping out. But it's a start.

And that leads me to why a partnership between Microsoft and Yahoo today makes more sense than ever. Some pundits say Yahoo has found its financial footing and therefore doesn't need a partner. Others say Microsoft has the makings of success with Bing and no longer needs Yahoo. Nope. This match made no sense when the two were weak, running the risk of their negatives preventing any meaningful threat to Google.

But as strengthening entities, getting together today just as their respective tides are turning, is the perfect timing. Not a merger, but a search advertising partnership that could cut to the core of Google's dominance. I'm not even talking about unseating Google, but 10, 15, even 20 points of market share would be enormously beneficial to Yahoo, Microsoft and their investors.

Message to Ballmer and Bartz: stop talking to the media about the potential of a deal, and start talking to each other about hammering out the specifics. You owe it to each other, and you owe it your shareholders.

Questions? Comments?