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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.

By Alexandra Petri  | July 31, 2009; 4:42 PM ET
Categories:  Petri  | Tags:  Alexandra Petri  
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Next: Where's the Fearmongering?

Comments

Productivity and profit go hand in hand. I doubt it will increase one or the other. Advertise with the newspaper and get more bang for your buck. Stay safe, stay profitable.

Posted by: Dermitt | August 1, 2009 11:32 AM | Report abuse

What's the difference between search and inverse search? http://inversearch.blogspot.com

Posted by: LisaH1 | August 2, 2009 4:00 PM | Report abuse

You clearly don't understand what this deal is all about.

"Search" is about the Web -- finding Web sites for people and sending people to those sites.

Neither Google nor its rivals make money from "Search".

What Ballmer wants is to control Yahoo!'s advertising inventory. This is all about page views, selling adds, and driving up the costs of advertising without actually increasing the number of page views.

With three pay-per-click advertising networks to choose from, advertisers have better control over their costs than if they only have 1 or 2 networks.

If Ballmer really wanted to increase search market share, he would not be looking to acquire Yahoo!'s "search business". He would simply do what Google does so well: leverage his content so that people spend more time clicking around the Microsoft network.

If the deal goes through:

1) Consumers (Web searchers) will have access to 1/3 fewer unique search results.

2) Advertisers will have to spend more on advertising because they have fewer options.

3) Yahoo! will sacrifice its core business and after 10 years Microsoft will be free to walk away and leave Yahoo! with absolutely no search resources or value. That's one less competitor for Microsoft.

Investors are making the right call on this deal: abandon Yahoo!, because Microsoft just sucked the soul of that company.

Carl Icahn should sell his Yahoo! stock now and just take the loss he has brought upon himself. And who will want to hire Carol Bartz after the mess she has made at Yahoo! now?

Posted by: michaelmartnez | August 3, 2009 1:05 PM | Report abuse

I don't care about the details of the deal. I can already search on Yahoo and Bing at the same time. It's called www.dogreatgood.com. You also get Google and Ask and they donate to charities like the humane society and petfinder.

Posted by: animalnation | August 7, 2009 4:02 PM | Report abuse

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