Google extends internet dominance

**Al-khiyal** · 16th April 2007 03:24

16 April 2007 -- Google's $3.1bn (£1.6bn) acquisition of the online advertising pioneer DoubleClick was being hailed over the weekend as another significant - but expensive - victory in the company's battle against Microsoft for commercial domination of the internet.

The deal is the largest in Google's history and it expands the company's influence in the market for internet adverts, adding a major business controlling many of the banner adverts and pop-up video commercials on websites. That comes on top of Google's control of two-thirds of the market for search queries, which generate their own lucrative text adverts.

Some advertisers and website owners moved to criticise Google's swelling power, and others dubbed the company "Google-Mart" - in reference to Wal-Mart, whose domination of the retail industry has sparked a backlash against the company.

Wall Street analysts, too, raised eyebrows at the price being paid, which is believed to be more than 10 times DoubleClick's historic annual sales and 60 times its earnings before interest, tax and write-downs.

Google sealed the deal with New York-based DoubleClick late on Friday after an auction of the company, which is thought to have been triggered when Microsoft made an approach earlier this year. Microsoft has been looking for new sources of revenue from internet advertising after getting stuck in third place in search-based ads behind Google and Yahoo. However, it ducked out of the bidding for DoubleClick when the price surged past $2bn.

"Google could not let this go to Microsoft and therefore paid what they needed to pay," said Jordan Rohan, analyst for RBC Capital Markets. Google's is paying for DoubleClick straight out of its cash reserves of $11bn.

DoubleClick acts as an intermediary between advertisers and websites, serving up banner adverts at the top of web pages and - following an acquisition last year - video adverts that start running when a website is opened. Google once dismissed such advertising as annoying for the consumer and poor value for advertisers, but Eric Schmidt, chief executive, said he had changed his mind after a strategy review this year. "The scale of display advertising business is much bigger than we thought and DoubleClick's management team has done a very good job building that," he said. "That was a change of view.

"This shores up Google as the absolute leader," said Forrester Research senior analyst Shar VanBoskirk. "This rounds out their capabilities in everything in the online space. There isn't anything they don't have."

Some industry players expressed concern that Google could run into conflicts of interest now that, through DoubleClick, it is working directly with advertisers to place commercials on specific websites, rather than simply auctioning off advertising space next to search queries.

Mr Schmidt dismissed suggestions that federal regulators may consider halting the deal or decide to investigate whether Google is becoming too powerful in the internet advertising industry. "This is a very, very competitive market in terms of number of choices," he said. "We don't see the concern."

Google extends internet dominance

**Bent_Bladi** · 16th April 2007 03:54

Originally Posted by Al-khiyal

DoubleClick acts as an intermediary between advertisers and websites, serving up banner adverts at the top of web pages and - following an acquisition last year - video adverts that start running when a website is opened. Google once dismissed such advertising as annoying for the consumer and poor value for advertisers, but Eric Schmidt, chief executive, said he had changed his mind after a strategy review this year. "The scale of display advertising business is much bigger than we thought and DoubleClick's management team has done a very good job building that," he said. "That was a change of view.

it still IS annoying, dammit

!!!!!

**sania** · 16th April 2007 15:26

Top of website ads. are no bother.
Just don't see them.

But pop-up windows are real menace..
Even after using block tool.
Ex: ad for WINFERNO S/W

**Bent_Bladi** · 17th April 2007 04:43

i hate those ads that make annoying noises - like the fly buzzing or that damned smiley that keeps on saying "HELLOOO!"

**Al-khiyal** · 6th May 2007 14:26

NEW YORK: Microsoft and Yahoo are in talks about a joint venture or some other form of cooperation as both companies continue to try to combat Google's pre-eminence in Internet advertising, people briefed on the discussions said Friday.

The discussions are part of an ongoing dialogue that the two companies have been holding for more than a year, but are still in preliminary stages, these people say.

The New York Post reported Friday that the companies were in talks that could lead to a Microsoft acquisition of Yahoo, a prospect that sent Yahoo's shares soaring. But one person briefed on the talks said there had been no recent acceleration in the discussions and that other forms of cooperation, short of a merger, were most likely.

Microsoft and Yahoo have previously considered some kind of combination, including the sale of a stake in Yahoo's search business to Microsoft, but failed to come to terms. The latest conversation could easily meet the same fate, as integrating cultures, personalities and technologies at the two companies would pose serious challenges. Some kind of a partnership, possibly involving Yahoo's new advertising platform, may be a more realistic outcome.

Microsoft officials said Friday they would not comment on speculation about a merger between the two companies. But a person who had been briefed on the companies' ongoing discussions said that a "creative partnership" was a possibility.

One option that had been discussed was the linking of advertising networks to generate additional Web traffic, according to a person briefed on the talks. Another possibility might be an Internet-only partnership, rather than an acquisition, this person said.

This person added that there had been no recent acceleration in the talks.

A Yahoo spokeswoman said the company did not discuss "rumors and speculation."

An outright acquisition by Microsoft may encounter resistance among Yahoo executives who perceive the company's single focus on the Internet to be one of its strengths. They could be wary of becoming part of Microsoft, a much larger company whose No. 1 business remains software.

Still, a combination of the two companies' online businesses would present a potentially powerful counterweight to Google's dominance of the online search and advertising market.

In March, Heather Bellini, an analyst at UBS, said that buying Yahoo would "improve Microsoft's position dramatically as well as alter the competitive dynamics of the search industry."

Over the past few years, Google has steadily increased its share of all the searches conducted online. In contrast, Yahoo's share has held steady over the past year, while Microsoft's has slipped, despite heavy investments to improve its search technology. As of March, Google accounted for 54 percent of all online searches in the United States, more than double Yahoo's 22 percent, according to Nielsen/NetRatings.

Microsoft and Yahoo enter talks to combat Google