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Microsoft Chasing Google
Posted By Barry Ritholtz On July 9, 2004 @ 9:05 am In Finance,Web/Tech | Comments Disabled
Fascinating discussion in the Circuits section of the NYT yesterday (Microsoft on the Trail of Google ):
“Despite its admirable if largely unsuccessful recent efforts to pioneer product categories – wireless watches, wireless screens and so on – Microsoft’s greatest hits have been clones of other people’s successful work, including Windows (based on the Macintosh), Pocket PC (PalmPilot) and Internet Explorer (Netscape Navigator).
Last week, Microsoft identified the object of its latest obsession: Google, the No. 1 Internet search page. (Google, you may recall, is preparing for an initial stock offering with an estimated value of $25 billion. Nobody bats around numbers like that without attracting Microsoft’s attention.)
For years, Microsoft’s own Web search page, MSN Search, has finished a distant third place in the search-engine popularity wars (behind Google and Yahoo). The company’s new plan is apparently to remake MSN Search in Google’s image.”
Microsoft has a monopoly on the desktop — and because of that, there are certain behaviors they are legally restricted from engaging in (at least, in legal theory). Microsoft should not be able to disadvantage competitors by leveraging that monopoly in a way that restricts competition.
Search is a perfect example: By setting the default on Internet Explorer to MSN search, and making it extremely awkward to change it, they automatically become one of the top 3 players in that space. What would take any other company billions of dollars to do, they get for, oh, about nothing.
Does that encourage or discourage competition? Apologists say it encourages it, but I find it hard to see how a dominant company automatically becoming the #3 player this way encourages Capital Investment. While there are many many other search players with great technology, why is it they are denied the #3 spot as a matter of right?
There is a reason these firms are underfunded: I remember sitting on some Venture Capital committees in the mid 90s — nearly every software firm I looked at, at some meeting, someone would say “What’s to stop Microsoft from building a similar functionality into their OS?” And that was Game Over: It would pretty much torpedo that firm’s funding. (I’m sure plenty of IPers had similar experiences)
In my opinion, a large part of the internet explosion was a function of all this pent up enthusiasm — both Capital Investment and R&D — finally breaking out from under the shadow of Microsoft. That’s right, I am — indirectly — placing some of the blame for the internet bubble at Microsoft’s feet.
And, it only gets worse. Google is a perfect example: What happens when an MSN search bar is built into every window, app or utility on Longhorn? There would not be a need to ever go to Google — or any other search firm via a web browser — because Microsoft will have built into Windows that usability. Their search doesn’t have to be great — Hell, it merely needs to be adequate — and Google is toast.
So much for encouraging competition.
The world’s least innovative (but most relentless) software company can imitate the interface, or ape the algorithms, but that doesn’t matter much. What Microsoft does so well is sandpaper away the competition by gradually turning their own buggy and insecure code into a very usable piece of software — over time. Sitting on a massive pile of cash — their $70 billion pile (cash and ST investments) is more than any other company on the planet — they can afford to wait. Eventually, they will own yet another market. (Its one of the reason I own and have rec’d the stock, despite disliking their methodology. I hate to admit it, but its a fiercely successful strategy)
That’s the power of a monopoly: By tying their existing dominance into other spaces, they can extend into other, unrelated areas. That’s why the DoJ settlement was so pathetic, and why the EU is so determined to stop MSFT’s foray into media players.
Google is on the short list of companies scheduled for eventual “Netscaping.” So far, Yahoo and Intuit have escaped that fate. I’m sure the IPers can think of a few others that have survived and died at the hands of this monopolists . . .
Once again, we go to David Pogue:
“For many searches, the results are pretty much the same at Google, Yahoo and MSN Search, which is to say outstanding. Search for “convert yen to dollars,” “divorce statistics for Brazil,” “5-string banjo tuning” or “oh susannah sheet music,” and no matter which of these services you use, the very first search result is a direct link to the information you want. (So often is the first listing what you want, in fact, that you begin to see the appeal of the “I’m Feeling Lucky” button on Google’s home page. If you click on this instead of the regularly scheduled Search button, you go straight to the Web page that Google considers most likely to have your answer, bypassing the results list entirely.)
But do enough searches, spend enough months, and Google gradually re-earns its reputation for superior accuracy. Search for “history of Phillips screwdriver,” for example, and you’ll find the answer hiding behind the very first result on Google and Yahoo-but not until the fourth listing in MSN Search’s results. (Caveat searchor: Search-engine companies are constantly tinkering with their search formulas, so your results may not match the ones described here.)
Similarly, typing “England average income” yields a useful answer in Link No. 1 on Google’s list and No. 3 on Yahoo. MSN Search doesn’t answer the question at all (at least not on the first couple pages of results).”
Is that enough to preclude the leveraging of Microsoft’s desktop monopoly into a dominance of search? I doubt it . . .
Microsoft on the Trail of Google 
By DAVID POGUE
New York Times, July 8, 2004
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URLs in this post:
 Microsoft on the Trail of Google: http://www.nytimes.com/2004/07/08/technology/circuits/08stat.html?ex=1246939200&en=f6c5c161594a3d17&ei=5090&partner=rssuserland
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