MSN and Google fighting to acquire AOL
Real competition between Microsoft and Google started back a couple of years ago when Bill Gates was browsing the Mountain View based search company recruitment pages. Gates found out that Google was hiring software development profiles similar to Microsoft’s. It all started then, the software giant decided to start up its own search engine, until then MSN was a replica of Yahoo’s Inktomi search results, then its own pay per click engine (Going live next month).
Steve Ballmer, chief executive officer for Microsoft since January 2000, was reported earlier this year to yell to a departing employee that he would kill Google!
Until now, we had no idea how this could happen. The two companies have quite a different profile, unlike most marketers may think Google is closer to IBM’s business model and rely as much on hardware as on software expertise while Microsoft is purely as software type of firm.
With such different profiles but a humongous capacity of investment the best practice would be to eat competitors lunch, which Google silently started and which Software giant Microsoft may do in return when eventually buying AOL.
The direct loss for Google would be close to $400 millions, mostly advertisement revenue generated by the Adwords program. Such profit loss would incise, about 25% of the search engine’s revenue, is unlikely to happen without a fight.
Partner Time Warner, controlling AOL, will benefit from this auction type of situation but already started going its own way, refusing Google talk VOIP (Voice over IP) proposal to launch its own service.
What about the thirst engine, Yahoo!, in a year of strong market acquisition Yahoo was unofficially reported talking to Time Warner about AOL too. In this situation, AOL having its own plans to serve its customers it’s unlikely that the company will be sold as a whole. Anti-trust laws may also slow down Microsoft’s acquisition process.
A partnership type of contract is more likely to happen; MSN would purchase AOL partially and for sure deliver its own pay per click ads to AOL customers.
It would be adventurous for now to try determining what and who will control AOL’s $400 million ads revenue, giving it a shot it should probably by Steve Ballmer’s Microsoft but Google is definitely resource less and keeps on surprising online market analysts.
