The Dangers of Microhoo?
By Alexandra Petri
To hear Sen. Herb Kohl (D-Wis.) talk about it, you'd think that something truly ominous was going on between Microsoft and Yahoo. According to Kohl, the recent agreement between the two companies sounds like collusion between "industry giants" that threatens the competitive fabric of the market and warrants a congressional investigation. But why is the Senate Judiciary subcommittee chairman issuing frightening pronouncements about a deal in which, as Microsoft CEO Steve Ballmer keeps repeating, "Nothing got sold...and nothing got bought?”
In fact, the deal isn't nearly as complicated or as anti-competitive as the buzz suggests. Bing, Microsoft's new "decision engine" will now power all searches on Yahoo’s comparatively more popular interface, leaving Yahoo free to handle the overall user experience and manage sales.
Confused what Bing is? You’ve probably seen the commercials, which warn of “search overload” induced by the failure of search engines -- Microsoft isn't naming names, but the implied target rhymes with "Moogle." Bing’s new approach to internet searching is supposed to be the cure. But if you don’t hear the stampede of multitudes running from Google’s grasp into Microhoo’s embrace, it’s because there isn’t one.
Sure, Bing excels at local searching. And its image search is far better than Google’s because it’s optimized for faster browsers -- you don’t have to keep clicking to go to the next page of pictures. But Google retains the advantage of its stripped-down interface while offering an ever-expanding arsenal of tools -- from Gmail to Google Book Search, which, if its settlement agreement comes through, will be yet another ace in Google’s hole.
Besides, the role of giantkiller is not one Microsoft is particularly skilled at assuming. It's too used to being the giant. And although Google dominates the market, it still has a sense of under-doggish whimsy that sets it apart from its lumbering pursuers. Type “I” into Google followed by a space, and it cheerily suggests such phrases as, “I can haz cheeseburger.” Try the same in Bing, and all you get is “internet explorer.”
Investors have been responding to the deal with anything but enthusiasm. Yahoo's shares have fallen since it was announced, with many investors seeing Yahoo's search capacity as an asset that its deal with Microsoft has undermined without providing sufficient value in return. This deal could turn out to be "anti-competitive" only in the sense that it could backfire against Microhoo's ability to compete.
That's why Kohl and his Antitrust, Competition Policy and Consumer Rights subcommittee of the Senate Judiciary Committee, who are going to examine the deal, should relax. Microsoft and Yahoo banding together against Google in the search engine department is a bit like my grandparents ganging up on The Rock in an alleyway. Two against one might sound anti-competitive in theory. But, in practice, their partnership, if successful, may be the only way to create competition. And there’s still a huge chance it could fail.
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