Microsoft + Yahoo! Scares Google

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Microsoft owns the computer and the Web browser. Buying Yahoo, world-class brand with key Internet technologies, will create new business opportunities in emerging markets
Microsoft to offer Yahoo has surprised some, but it makes sense when the history of these companies and their respective technologies are considered. The important question is the strategy that the merged company will take in order to compete with Google?

Microsoft's strategy to compete with Google
Google dominates the search market in the United States and Europe. Microsoft's post-merger strategy would be to allow Google to be the leading Internet search engine in these territories, preferring to fetch the web page contextual advertising, display advertising and research on emerging markets. Microsoft's strategy could be to allow Google to direct users to a Web site, but Microsoft would take the recipe when the user clicks on ads on the Web page.

Microsoft could increase their presence in this market by providing the website owner a greater portion of any income earned by a click-throughs, contextualizing ads on the page with greater accuracy and providing a better experience advertiser. Research in emerging markets such as India, China, South America and Africa is where the turnover in the medium and long term must be earned. The income earned here will allow Microsoft to compete in research and more established territories.

Google vs. Microsoft's vision of computers
Google want a future that is based on the web, where all users of services (such as e-mail, office applications and social interaction) are based on servers hosted by Google. If this vision a reality, the operating system and desktop-based software becomes much less relevant. Microsoft derives most of its revenues from the sale of operating systems, desktop-based software and services thereunder, Microsoft is rightly concerned about the new web-based department is taking.

Microsoft original internet strategy based around MSN did not work as Internet users do not want to use a network exclusively, rather they want to consume services and they need a search engine to find them. Google would like to see a future where the computer becomes only four things: a screen, keyboard, mouse and a Web browser.

Microsoft and Yahoo will benefit advertisers and Web users
Microsoft buys Yahoo Yahoo to use technology online advertising and other Internet technologies. The company is able to compete seriously with Google, growing competition in the market, which should bring down prices for online advertising and improving the customer experience and the user. The vast majority of Google's net revenue is derived from online advertising.
An entry by a combination of Microsoft and Yahoo in this market Google could hit hard. Google, net income in 2007 was $ 4.20bn. Microsoft has $ 14.06bn. Although Google is very powerful in online advertising and is a well-known supplier of certain online services (youtube and GMail), the scope Google is currently limited to the Internet. A combined Microsoft and Yahoo would be a second player in online advertising, as well as the dominant player on the desktop and in business.

Microsoft can then take advantage of their control of IE, the operating system and its software business to build a smarter combined office and computer online, an experience that will leave Google play catch up. And that's what frightens Google.