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Google vs. Microsoft: The Data War

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First of all, watch the video. This is a preview of this discussion, so take a look. This was first introduced to me by Dan Kennedy. It's a few years old but it's proven deadly accurate – except for the references to the dying Friendster, which could just as easily be MySpace.

Lock and load.

Google began with an almost ridiculously simple website in an age of complexity. At the same time, the most popular search engines, including Yahoo!, were complicated and verbose portals of information, sorted into detailed categories. Google appeared with little more than a dialog box and very rapidly changed the way people seek out data on the Internet.

Yahoo!, which has changed its face but not its quantity of front-page content over the years, remains, for now, the most frequently visited website in the United States, according to Alexa.

Google has become the second most frequently visited web site in the United States, but remains third in the world behind Yahoo! and perennial giant, The Microsoft Network (MSN).

And that is where we pick up our story – the story of the war between two giants who are making the Internet only big enough for one of them.

This year, Google and Microsoft have been working feverishly to sign agreements with other popular websites to supply them with advertising and search technology.

Google dropped a bunker-busting nuclear bomb when they signed MySpace, the third most trafficked site in the world and the most popular social networking portal on the Internet. As reported, Fox Interactive Media, MySpace's parent company, agreed to have Google provide all of its search and keyword-based advertising solutions. This deal represented a massive show of force from Google as Microsoft had previously failed to secure the same agreement with Fox.

It is also relevant to note that MySpace.com alone reaches more people per day in the United States than MSN.com. MSN.com is the fourth-ranked website in the U.S., just behind MySpace.

Microsoft scrambled to rebound from this news by quickly signing an advertising deal with Facebook, the second most popular social networking portal. This was a necessary step, but as colleagues at Seattle PI reported, the deal raised some desperation alarms. The Wall Street Journal reported this deal was reached and signed over a weekend at the same time Facebook was starting to seriously talk with Google. This shows the agreement may have been rushed to avoid losing both MySpace and Facebook to Google.

While a positive salvo for the Microsoft side, this deal is nowhere near as large as Google's pact with Myspace. Facebook, amazingly popular with college students, has less than ten percent as many reported users than MySpace.

Google also reached a deal August 2 with XM Satellite Radio to provide automated solutions for its advertisers. The same day, it was reported that Google and long-standing Microsoft partner, RealNetworks, reached a deal that has Real offering its users the chance to bundle its software with Mozilla Firefox with Google Toolbar. Firefox has, itself, fired pot-shots at Microsoft's web-browsing dominance.

Now comes the kicker, WSJ Online reported today that Google's CEO, Eric Schmidt, was elected to the Apple Computer board of directors.

Yahoo! appeared to gain strength when CNET reported a "Google buster" deal between Yahoo! and Internet auction original, eBay, May 25. That was busted when eBay signed a new deal Monday, with Google.

Google and eBay have never gotten along, but they both see dollar signs and the auctioneer was all too quick to forget Yahoo! for Google and a new feature called "click to call" advertisements, which will be household term in a few months.

All eyes should now be on YouTube, which has not signed an exclusive advertising deal with anyone yet. Google, and its ability to put dollar signs into even Rupert Murdoch's eyes, may be the one to win over YouTube, a popular free video sharing and hosting service. Google promised News Corp $900 million in the MySpace deal. This would put Microsoft even further behind Google in the data war.

What does this mean?

Website popularity is not just about bragging rights. As previously discussed, it's all about money.

The age of the Internet Service Provider is closing. Even AOL is giving up trying to make money by charging people to get on the Internet. The Internet is no longer a toy or a luxury, it is a vital necessity and a part of everyday life.

But someone, somewhere has to make money off it somehow in order to keep things moving. That's where advertising comes in. As long as people look, read, watch, browse, and chat, advertisers – and the people who provide advertising technology – are going to make money.

The war is about who gets the biggest piece of the pie.

Microsoft and Google are the Soviet Union and the United States 20 years ago. One a lumbering giant trying to hold fast to its traditions, but learning it has to adjust to the times in order to survive, and the other a fast moving, aggressive powerhouse jockeying for position.

Yahoo! absolutely will lose its market share if they don't make a large move very rapidly.

There are no missiles or walls this time, only information: not just the ability to search for information, but the ability to store, gather, and provide information – the exclusive ability. Some of that information is not necessarily requested, but advertising is the price people are going to pay for free content and services.

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  • Eric

    Interesting that people are starting to understand how important it is for people to talk to each other. Click to call has to be the next big thing in advertising which is the model the internet giants are embracing. Does anyone know of a patent for this?

  • http://blogcritics.org/archives/2006/08/30/073947.php Sivasankaran

    Youtube is one of the most popular video sharing sites on the net. A year ago, co-founders Chad Hurley and Steve Chen were in between jobs, a pair of twentysomething geeks running up big credit card debts as they tooled around a garage trying to develop an easy way for people to share homemade videos on the Web.

    Hurley says, “I do not want to work hard. I want to live a soft life. I want to sleep for three hours every afternoon. I do not want to stay awake the whole day so that I can get a few grand at the end of each month. That is why I choose to live off the net. I am too lazy to try and survive in the real world. That is why I did not bother to hold down a job though my credit card debt soared. On the net things are handed to me. The idea of youtube came to me from a dinner party with a half-dozen friends in the geratest city in the world San Francisco. It was January, 2005, and we couldnt figure out a good solution. Sending the clips around by e-mail was a bust: The e-mails kept getting rejected because they were so big. Posting the videos online was a headache, too. So we creaed a site and put in basic software.

    “What I and Steve came up with is a Web site, now called YouTube, that has become an Internet phenomenon. Show the honey and the bees will flock to it. We worked for about six hours each week for two months designing youtube. We had the idea to create a community around the video. Once that was done we knew that tons of millions of dollars would just flow into our laps after a buyour which we expect to happen very soon. We will not have to work hard. In the old economy you have to work really hard for a lousy promotion which might give you a few more grand if your employer is very generous. You have to acquire new skills to stay employable. You have to work for 10 fucking years to be able to become financially stable. that is so pathetic. On the net once you have the idea magic will happen. That is what happened at Paypal.

    “The basic software that I and Chen designed allows people to post almost anything they like on YouTube in minutes. Now we are sitting at home on our arses waiting for a buyout. I expect to make at least 400 millon dollars personally. Content has been handed to us on a silver
    platter. We do not have to slog hard to create content like a poorly paid online journalist who makes a lousy 450k each year. We do not have to experience daily financial pressure because our site does not get enough readers.

    “We have it easy. The reason why we never held a job for more than a year was because we felt that a rope was attached to out necks. We would have had to stay chained in an office with four walls. It is such a pain to get up and run in the morning for the sake of a few grand at the end of the month. The content that we offer is free. That is easy for us to that as we do not have to work to create it. Copyrighted work is there for our users to copy and paste as that is work which we have the right to copy. Other content comes from common folk wanting to share stuff.

    “Revenues will come from advertising. the net is a click and eyeballs business. The clicks wil come from youtube’s milllions of eeyballs that we have not worked for. It is unearned traffic. We do not have to sweat and bleed for it. That is the privilege of poorly paid online journalists. I do not have to worry about losing my job as my content does not get get enough page views. I do not have to take the initiative about my own life. I do not have to discipline myself. The millions of youtube.com visitors will ensure that this will never happen. I can simply focus on trying to build relationships with my tall, tough women friends in San Francisco. We hang out together. We work out together. We sleep in the afternoon together.”

    [Personal contact info deleted]