Sunday, December 21, 2008

Was Google-Yahoo Ad Pact Move By Google To Sabotage Yahoo?

Comments on the possible reason Google backed out of an acquisition of Ringside Networks this year started me thinking about a deeper evil motivation behind the Yahoo Google ad partnership and Google's back down from it earlier this month.

Could Google have made the effort to start the process just to stop Microsoft's acquisition of Yahoo? Did they jump out of the partnership, not to avoid the possibility of a legal battle, but because they had achieved what they wanted?

Let's go back to the Ringside scenario. "There are two dominant Social API's - the Facebook API and the OpenSocial API. The Ringside Social Application Server implements both API's so that a website or application can run their social application anywhere on the web. Additionally, the Ringside Server provides a way for websites to build their own friend networks that also integrate into the large Social Networks like MySpace, Orkut, hi5 and other OpenSocial-based Social Networks," as their website explains.

Google was interested in this application as it would have enabled them to compete with MySpace and Facebook. But they were fast also developing their own.

When Google approached Ringside they were about to get second round VC capital, which they turned down as they possibly were about to be acquired by Google. When Google stepped away from the offer the company ended up folding, unable to get funding they had turned down. Subsequently the company folded.

Interesting story in and of itself. Now let's think of this in terms of Yahoo.

Earlier this year, Microsoft made an earnest bid to acquire Yahoo and given Yahoo's financial situation they may have been forced to sell if they had not started the ad partnership with Google. Everyone watched the move and many started the cries of monopoly, but was this Google's distraction - the part of a masterful preconceived move to cripple Yahoo and deny Microsoft the chance to jump up to a real contender in the space?

I know it all sounds like a conspiracy theory but one that has some merit. Microsoft has pretty much given up on Yahoo and to a large extent the push to challenge Google in the search arena.

Jerry was made to look inept and will step down as Yahoo CEO. But, they did offer to fight the Sherman Act challenge - one I think could have been won. The partnership was not restricting advertisers access to Yahoo and the price at both are bid based so raising them would have been up to the actual advertisers not the company.

As Ringside CEO Bob Bickel details in his blog:

We were ready for our Series A round of funding, and in late May we received a number of term sheet offers from the very best VC firms. As we were about to finalize our funding, one of the biggest non-evil Internet companies asked if we would have interest in being acquired instead. After a lot of thought and debate, we decided that the larger company would enable us to get our technology to market sooner and with more impact.

The story sounds almost too good to be true. And it was. After dragging out the process for most of the summer, the non-evil company decided that they really did not want to acquire the company after all. Recommendation: always beware of wolves dressed as Grandma, they may be more like Microsoft than they admit.

Maybe he should have said the "no evil company" dislikes Microsoft more than they admit. We know Larry and Sergey are smart - but are they "evil geniuses"?


  1. You bring up some interesting points Frank, that is for sure! One would certainly hope that Google doesn't have such sinister motives...

  2. Frank - I think there's little doubt you've identified a motivating factor. Though the deal may have been primarily a sensible way for Google to make money, it certainly occurred to Google that an additional benefit was the negative affect it had on a potential Microsoft-Yahoo deal.

  3. Of course Frank--Google, like Faceboook, has the backing of the NSA, CIA, etc. Google has acquired enough fiber to create their own internet. They've got a long-term strategy that is tied into the long-term strategies of the crew that has given them an offer they can't refuse. This is why Google censors certain political views that go against certain agendas. The incredible selectivity of their censorship reveals much.

    Yahoo had a more narrow motive. The execs didn't sell out to Microsoft because they would have lost their jobs. They saw the cash Google mints daily and did the selfish thing.
    Google's weakness is still their search algorithm, which is crap even if it is better crap then the competition. All it will take is for one genius to come up with a better one, and chose NOT to sell out to Google.

    Then Google is done. Google knows this is their Achilles heel, which is why they have such brutal standards these days. They are like Microsoft, who constantly patches up what is a piece of shit--even if it is the best piece of shit out there.

  4. Given Google uses the buy into a related industry and give away until companies close doors... this method is not a stretch