Top of the News: It would be too harsh to say that Microsoft and Yahoo are two drunks propping each other up as they prepare to do battle against the cold sober and hot successful Google. Still, the 10-year partnership raises many questions.
The two are starting from far back: Google claims 65 percent of the search market; Yahoo 20 percent, and Microsoft 8.4 percent. Microsoft is paying a lot to get second place.
Most intriguing is Microsoft boss Steve Balmer’s promise that the agreement will lead to “innovation” in search. That’s a promise to shareholders, and much more strongly worded than Microsoft’s recent cautious language. It may be difficult to achieve innovation when working with an outfit that was lapped by Google, and when Microsoft’s breakthroughs — fewer in number nowadays — have typically come from in house, or from the control that comes from an outright acquisition.
Maybe a tighter embrace isn’t far off. Yahoo chief Carol Bartz wasn’t hired to preside over further erosion of shareholder wealth — disappointed investors pounded the stock this morning.
It’s also true that Microsoft has the potential for a contender with Bing, a breakthrough it made on its own. But can Yahoo hold up its end with the advertising, in an environment increasingly controlled by Google and in the historic reset of the Great Disruption? Yahoo will be getting several hundred million dollars from Microsoft to make it happen — which doesn’t sound like much of a partnership of equals.
Yet another question: Will the Obama administration’s tougher stance on antitrust create hurdles to the partnership?
Midweek Briefing: Remember those leveraged buyouts at the end of the boom? The debt will be coming up for refinancing in 2012 — in a very different environment. Panelists discussed the coming “wall” at the Wharton Private Equity and Venture Capital Conference.
–Who Nationalized Whom Dept. Economist Simon Johnson on the growing influence of the big banks in the wake of the financial crisis: “We are looking at a concentration of political power in the U.S. banking system that we haven’t seen since the 1830s: Shades of Andrew Jackson vs. the Second Bank of the United States.”
–Wish I’d Have Thought of That Dept. A great name for a blog: themessthatgreenspanmade.
–The feds have out the monthly metro area unemployment numbers for June. Joblessness was higher in all 372 metropolitan areas compared with a year earlier. Portland had one of the worst: up 6.3 percentage points. Seattle: 9.3 percent vs. 4.6 percent.
Today’s Econ Haiku:
Is Google gig’ling?
Or quaking in its search boots?
We’ll wait to hear ‘Bing!’