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Microsoft Ballmer's insights into Google-DoubleClick merger

I always take time to read interviews with CEOs because I always learn something.

What did he say that was relevant to the Google-DoubleClick?

First, he made the case why the Google-DoubleClick merger is a big deal:

  • "I do think that it would be worth the regulators taking time to understand this market, much the way they took the time to understand other parts of the technology business, because the whole future of the media and advertising will move to the Internet. "
  • "What we think of television today, what we think of newspapers, magazines, you name it -- all of these things are going to move to the Internet and be funded by advertising. And so we are talking about a pretty important part of ... people's basic lives." 
    • What this means is that Google-Doubleclick is about the evolution and the future of advertising. 

In response to a question about being third in search -- Ballmer said:

  • "Online activity is really quite fractured. Microsoft has the most visitors. Yahoo actually has people spending the most time with them. And Google makes the most money."
  • "The real question is what's going on in the commerce and the advertising side. That is not very fragmented. Most websites rely on DoubleClick, Google or Yahoo for our stuff to run."
    • What this means is that don't look at "activity".
    • Follow the money.
    • Where the money is -- and where the monetization is -- is where the heavily concentrated online ad market is.  
    • This is why antitrust authorities will have to give this merger such a thorough review.

In response to a question about when Microsoft's MSN would become profitable, Ballmer said:

  • "...we take the long-term view. It took a long time for Windows to reach critical mass. It took a long time for music players to reach critical mass."
  • "The guys at Google were at it, what, eight or nine years before they reached critical mass."
    • "critical mass" is a euphemism for dominance for any of those who glossed over that quaint corporate term for successfully dominating a market.

The fact that the WSJ reported today that Microsoft and Yahoo are in talks again about a merger, will make the antitrust scrutiny of the Double-Click merger even more intense.

  • Online advertising is the business model engine that will fuel the next generation of digital content.
  • How the Google-DoubleClick merger plays out will largely determine the future of online advertising.  
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