Yahoo's Openness Asset
What if Yahoo's main value isn't its search engine or its advertising business, but the openness that makes it more Net-native and hacker-friendly than Microsoft? Does Microsoft understand that this same kind of openness plays a large role in Google's success as well?
The openness of the Internet is what made Google -- and Yahoo! -- possible. A good idea that users find useful spreads quickly. Businesses can be created around the idea. Users benefit from constant innovation. It's what makes the Internet such an exciting place.
So Microsoft's hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation.
Could Microsoft now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC? While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets.
Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet? In addition, Microsoft plus Yahoo! equals an overwhelming share of instant messaging and web email accounts. And between them, the two companies operate the two most heavily trafficked portals on the Internet. Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions -- and consumers deserve satisfying answers.
That last paragraph, however sincerely felt and expressed, is FUD. The chance of Microsoft trying any of that crap, much less succeeding, is zero. Or, if they try, suicidal. As Joe Nocera says in the New York Times, "the old strategies that once worked so well for Microsoft strategies that worked when the world still revolved around Windows have no place in this new world".
On the other hand, the chance of Microsoft trashing Yahoo's open culture, open code, open APIs and support for open communities exceeds zero. But by how much? We don't know yet. We might hope that Microsoft begins to understand that one big reason Google kicks Microsoft ass is Google's highly participatory membership in the world of open code and open standards. We might also hope that Microsoft might understand that the most valuable assets Yahoo has are goods that are totally useful but essentially un-sellable. That includes employees, users, customers and code.
Of course the mainstream ignores that completely.
Also ignored is vulnerability in the entire online advertising business. It's growing like crazy, but it also has all the signs of a bubble just like it did back when "push" was a big buzzword* back in the late 90s. As Don Marti put it to me on the phone a few minutes ago, "the main role of advertising is to cost money".
For all the degrees to which Google has improved advertising by making it accountable, and by making it useful as a strategy for countless companies large and small it is still wasteful. For every click-through there are dozens to millions of "exposures" that are wastes of electricity, server cycles, bandwidth, pixels, rods and cones.
Advertising is also all about supply pushing toward demand. What happens when demand starts pulling supply? On its own terms, and not just those of the supplier, and outside of any supplier's silo? This will happen, and it will obsolete much of advertising as we know it.
No, I'm not saying advertising will go away. It won't. But the bubble will burst. Count on it.
Meanwhile, if it looks like Yahoo will disappear inside Microsoft, or if the only Yahoo assets Microsoft finds worthwhile are search and advertising weapons it can use to battle Google, this deal will go down as one of the biggest blunders in business history.
* Those two links go to pieces I wrote back in 1997 and put up on the Web because I couldn't sell them to any mainstream magazine. They provide a good window on the last bubble, gassing up on bull fumes.
Doc Searls is Senior Editor of Linux Journal
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