Tuesday, October 25, 2011

Google's monopoly to be strengthened?

Word on the wires is that Google is seriously contemplating a buy-out of Yahoo.

Well actually, they're not being quite that blatant about it because a direct attempt at acquisition by Google would likely be disallowed by anti-monopolies (antitrust) legislation and thus would fail.

However, there is more than one way to skin a cat and information has come to light that Google may attempt an indirect buy-out by funding a third-party group of companies to bid for what was once the Web's most valuable property. I say "was once" because Yahoo has fallen on hard times in recent years and is now ripe for takeover.

However despite falling from its once mighty position as "the defacto hub of internet content", Yahoo still has a larger share of the search market than its nearest competitor, Microsoft's Bing. It is because of this that a direct pitch by Google would fail.

Right now, Google has a massive 65% of the market and Yahoo has around 16%, versus Microsoft's 15% so a complete acquisition would give Google more than 80% market-share, clearly a situation that would cement its current move towards "owning" this sector of the industry.

Of course Google has another reason for wanting to buy Yahoo -- simply to avoid Microsoft doing the same. If the boys at Redmond were to purchase Yahoo, they'd double their share of the search market with the stroke of a pen (and the rustle of dollar bills) -- and that would erode Google's own position.

According to reports, Microsoft's Bing has not been the success they'd hoped -- in fact it's bleeding red ink quite significantly. Although Yahoo itself isn't exactly massively profitable, the synergy of the two search engines and the resultant ability to rationalize costs could see a turn-around on the Microsoft ledger for this part of its business.

Google has a mantra of "do no evil" which it has managed to keep to (by and large) so far. There are grave concerns however, that if it does establish such huge dominance in the search market, the temptation to stray from this ideology may become too great.

You know what they say... power corrupts, and ultimate power....

Perhaps what's needed in the online marketplace is more competition rather than less.

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