Goo Hoo: The Fox Is in the Hen House

June 13, 2008

I am breaking a self-imposed rule about ignoring Web search and focusing on the enterprise or behind-the-firewall search. I am also commenting about online advertising, another aspect of today’s world that is of little interest to me. But I can’t pass up the swarming of Web log authors who want to comment on the Google and Yahoo decision to tell the world that they are now going steady.

Goo Hoo is my moniker for this relationship. I have dipped and sampled about two dozen postings about this deal. You will want to read the comments of Stephen Shankland and his “Yahoo Inks Search-Ad Pact with Google”. It’s an excellent summary of the deal with some informed commentary about the value of the deal on Yahoo’s cash flow. I think this is important but it is not the main point of the tie up, a point to which I will return in the observations section of this news analysis. You will also want to read Henry Blodget’s summary of the key points of the deal. His perspective, as always, is helpful if you want a glimpse of how Wall Street reads the tea leaves on the back seat shenanigans of two high-profile Internet companies. Mr. Blodget’s June 12, 2008, commentary is here. You can grind through the mountain of links on Techmeme.com, Megite.com, and Newspond.com, among others.

The pick of the litter and the one that made me grin was Google’s own announcement here. Please, read this, preferably after taking a gander at my tongue-in-cheek essay called “Goo Jit Su: Google’s Art of Soft Force in Competitive Fights” here. When I wrote that piece in early 2008 for my KMWorld column but I decided it was too frisky for a “real” publication, not this wacky Web log with which I am now saddled.

Google says in its typical fun-free prose:

We have been in contact with regulators about this arrangement, and we expect to work closely with them to answer their questions about the transaction. Ultimately we believe that the efficiencies of this agreement will help preserve competition.

I quite like the phrasing about working closely with regulators. I also like the “preserve competition” phrase. I’m not sure if the logic is as crisp as that set forth in US20080140647, Google’s patent about universal search here, but I think the idea of preserving competition is memorable.

Observations

Let me offer my observations, which, as you know, are based on my view of the online world:

  1. The lawyers are going to be able to buy new cars on this tie up. No, I am not interested in working as a consultant to a law firm nor as an expert witness. But some folks will make a ton of money litigating about this action. The notion that a regulatory body has a firm grasp of how online works is going to get quite a test in the coming months. There is always the chance that the knife that cuts Google’s Achilles’ tendon is going to be wielded by a female attorney from Duke Law.
  2. The GOOG without much effort has managed to rain on the Microsoft parade. Just as the Redmond crowd gets free of the Don Quixote charge at Yahoo, Google announces that the Mountain View couple has become an item. I anticipate T shirts that say, “Goo Hoo”. Maybe I will have Zazzle make a few?
  3. Advertisers won’t know what’s happening for months, if ever. The GOOG makes it clear that no human is involved in the ad system. If Google wizards show a Madison Avenue type an algorithm, I’m not sure that will clear the fog about who does what, how, under what circumstances, and where the money actually goes.
  4. The consultants are going to have a banner quarter. I anticipate expensive analyses from consultancies world wide explaining the upside and the downside of this deal. Let me save you some money: Google wins. Yahoo is now wearing a shock collar and Google controls how much pain to administer and when. Microsoft is puzzled. Attorney are looking for new condos in Costa Rica and Belize. Regulators have a chance to make the six o’clock news for the next three to six months. And that competition point. Hmmm.

Maybe I should change “Goo Hoo” to “Boo Hoo”? The Googlers have done it again. Goo Jit Su. With little effort, the fox-like Google is in the hen house now.

Stephen Arnold, June 13, 2008

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