Defending The Right to Acquire
If you’re interested in the marriage that might have been and could still be between Microsoft and Yahoo, check out my appearance on C-SPAN’s weekly show The Communicators, which is unfortunately only available in our favorite format, Real Media.
Though Mr. Ballmer’s proposal was rejected the first time, he’s not one to give up easily and he’ll likely barrow even more than the few billion he thought he’d need to increase the size of the dowry. Though he may want to pause, at least for a moment, as the Wall Street Journal reports that tech stocks are up after this weekend’s rejection of the deal by Yahoo!
Regardless of whether Microsoft is successful in its quest to obtain Yahoo, one thing is certain, the FTC should not block such a move. The FTC is charged with ensuring that competition is adequate in markets, but the internet advertising market is beyond competitive, its hyper-competitive. Just look at how rapidly internet firms can go from zero to hero.
Facebook has gone from a dorm room hobby to a company nearly equal in value to Ford Motor Company in only a few years. Sites like Digg, Talking Points Memo, The Huffington Post, and many others enjoy such high readership that they can court advertisers individually and don’t have to go through networks like those offered by Google, Microsoft, and Yahoo!
The biggest variable in the equation, however, is that this market is still growing. The domestic online ad market is expected to double in the next two years and though hundreds of millions are online globally, we should expect that number to reach into the several billions in the decades to come. That means our current market is only a fraction of its future self, leaving a lot of room for existing companies to grow and for new firms to enter the fray.
Though I hate to mention it, if we’re heading into a recession, expect ad buyers to migrate to the net and accelerate this growth. In times of economic downturn, advertisers conserve resources by turning to high value ads. Right now, that’s the web. Television and radio will be hit worst, followed by magazines and other printed publications. The net, however, will continue to grow and as ad-dollars are focused on where they do the most good. Expect entrepreneurs to fight for a piece of that growing pie and some incredibly brutal competition to emerge.
Among those firms vying for ad dollars could be a united Microhoo!, or two separate companies, or a yet unimagined combination. Whichever way the market decides, regulators shouldn’t stand in the way. These firms will already have enough trouble staying afloat in the years ahead.