Hasta La Creative!

Has Eric Schmidt lost his mind? – March 18, 2008

Or is the Google CEO crazy like a fox? He certainly has been talking some crazy smack lately about Microsoft’s proposed acquisition of Yahoo, as in this recent exchange in Portfolio.

Why does a merged Microsoft-Yahoo pose such a threat to Google?
It’s an unstable situation. But the theoretical issue is the concentration of Microsoft’s resources and its history, combined with the very large share that it would have in certain applications—like instant messaging and email—that could be used essentially to break the internet and diminish choice.

Break the internet?
All internet-based systems today are highly interoperable, open systems. The whole antitrust trial that Microsoft went through was really about it breaking that.

 

Or this one from Reuters:

“We would hope that anything [MicroHoo] did would be consistent with the openness of the Internet, but I doubt it would be.”

Schmidt pointed to Microsoft’s past history and “the things that it has done that have been so difficult for everyone”, but he did not elaborate.

Given that the Internet is in the process of breaking Microsoft’s long dominance of desk-top computing, it’s hard to imagine anything it could do at this point that would “break” the Internet.

And Schmidt (a 2007 ContentAgenda Setter) can’t be serious about email and instant messaging. Given the overwhelming importance of search to the Internet ecosystem–which is overwhelmingly dominated by Google–even if MicroHoo did achieve dominance over email and IM, those applications would not give it anywhere near the leverage Google derives from its dominance of search.

And therein, perhaps, lies the secret of Schmidt’s foxy misdirection. Perhaps, by focusing regulators’ attention on Microsoft and its past misdeeds, Schmidt hopes they won’t notice Google’s own growing dominance of the Internet economy.

OK, that’s probably a stretch. But the fact is, search has become the operating system of the Internet, the basic tool that allows people to “use” the Internet. And Google’s dominance of search gives it a position within the overall Internet economy not all that dissimilar to Microsoft’s role in the desktop computing economy a decade ago, when it’s Windows monopoly ruled the computing world.

Just as any application developer then was dependent on Windows compatibility and Windows APIs to be economically viable–and was ultimately vulnerable to me-too competition from Microsoft itself–anyone publishing content on the Web today is dependent on Google and other search engines. If Google can’t find your Web site, or doesn’t assign it a high enough index score, you might as well not be on the Web because search drives the traffic you need to monetize your content.

You can have the most compelling content in the world, just as a decade ago you could write the most compelling application anyone could imagine. But if they aren’t “compatible” with the dominant user interface you can’t build a business on it.

Publishers like Content Agenda’s parent company Reed Business Information, for instance, have whole departments dedicated to making sure its content is “compatible” with the dominant search engine. Economically, it acts like a tax on Web publishers, just as Microsoft’s dominance of the PC OS market acted like a tax on applications developers and PC OEMs, and it places the same sort of constraints on the types of applications that can be developed.

That doesn’t at all mean the Google will necessarily behave as Microsoft did in abusing its OS monopoly. But if I were a regulator concerned with the future economic development of the Internet, I’d be paying at least as much attention to what Google is up to as to Microsoft, with or without Yahoo.