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    Who Will Microsoft Buy Post Googlehoo?

    By
    Clint Boulton
    -
    June 16, 2008
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      Now that Microsoft has officially whiffed on search in the wake of walking away from the table empty handed and target Yahoo getting in bed with search king Google, what’s next for the software company?
      Last week Kara Swisher wrote about how Google would likely go on the offensive. The idea is that Microsoft, with its aggressive overtures toward Yahoo, woke the sleeping bear, or at least poked it while it was quietly shambling through the search advertising forest.
      Swisher tosses around the old-time fave targets such as Digg (just do it already, Google!), FriendFeed and Slide. Why not? All of these companies would prop up Google’s relatively weak social offerings.
      OpenSocial is a great idea, but it’s not going to build a network for Google, at least not that quickly. The APIs are going through several iterations before a mess of OpenSocial apps see the light of day. I’ve argued that Google might buy Rearden Commerce for an nice entry point into e-commerce driven ads.
      In reality, Google needn’t do anything, particularly now that it’s getting cozy with Yahoo, so what will happen in the space? Google may buy some smaller vendors, but I expect Microsoft will make the dramatic moves.
      Look, if Microsoft was willing to break the bank for Yahoo, who is to say it can’t or won’t systematically gobble other media or Web apps providers? Search is the best way, but not the only way to make money in online advertising today.
      To that end, there are two avenues I can see Microsoft proceeding along. One, Microsoft will attempt to boost search share by bidding for AOL, Ask.com or both.
      This could be a dicey proposition because neither hold a lot of sway in search, less than 10 percent together, and Microsoft might have to pay significant premiums from their holding companies that want to make a crisp profit.
      But Microsoft still wouldn’t pay nearly as much as it would for Yahoo—I’m thinking $10 billion or less for both.
      Two, and the more likely scenario, is that Microsoft eschews direct search acquisitions for the social powers, Facebook or MySpace. Facebook makes more sense at this point because of its rising popularity and of course Microsoft’s existing investment in the social network, valuing it at $15 billion.
      MySpace may have more users for now, and the redesign looks sweet, but it is more of a media than a technology company and not just because it’s owned by News Corp. I’m not convinced MySpace’s apps platform will ever be as big as Facebook’s. No, Facebook seems like a bonafide technology company, and I’d bet the company will blow up and become superbig.
      See, Facebook has grand plans, including creating an e-commerce platform to help programmers sell their apps.
      Microsoft would do well to buy Facebook and help extend that brand on the Web. Let it ride, but don’t interfere. Let its Atlas ad assets bolster Facebook’s social ad initiative and see what sticks. Google hasn’t even figured out social ads yet, so Microsoft would do well to help foster Facebook in this regard.
      As painful as it may be, Microsoft might do well to forget about extending top-line search for now, despite it’s rich lucrative nature. Maybe Twitter is the answer, or buying a swath of cloud computing startups.
      Finally, and let’s not forget this given the buyout conditions in the Googlehoo deal that give Google an escape hatch in the event Yahoo doesn’t make $83 million over four months, Microsoft can always swing back around to Yahoo.
      Also, I’d wager that if regulators nix Googlehoo, Microsoft will be there in one hot minute to take Yahoo’s arm, albeit for a reduced price.
      The point is, Microsoft may be wiping the egg off of its face for whiffing on Yahoo, but there are enough pies out there for the company to dig its maw into.

      Clint Boulton
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