There is a huge issues in regards to Microsoft and big media companies trying different techniques to run other firms search services out the business. On November 23rd of this year, it was said that Microsoft and News Corp are discussing that the world's largest software firm should pay other firms, such has Time Warner, to block Google from messing with their content and have Bing, Microsoft's new search engine be the main deal to search the web. How far does Microsoft planning to take this? How much are they willing to spend to make it happen?
Questions are being asked and not much answers have been given. The main concern for Microsoft is to have their new search service rival to Google, in any means possible and involving the network externalities as well. As it was such a surprise that News Corp brought upon the idea of doing so, Microsoft went on board. Google has a negotiation with News Corp that gave Google the full right to place contextual advertisements on Myspace, a social network owned by News Corp in 2006. News Corp is not too happy by that discussion. The agreement was for Google to pay $900 million over the next three years from 2006 for them to have the ability and right to advertise.
As of today, Google has one of the fasting growing traffic from other wedsites to newspaper sites. The firm is leading so much higher than Microsoft's Bing. How does Microsoft think they can bet Google and Google News? Also currently, more than a quarter of visitors to the Wall Street Journal's site are those who currently use Google as their number 1 search service. So as far, Microsoft has a huge competition in their hands. The firm can not afford to let Google get in their way of ruling the entire search service business. Now with Bing, Microsoft believes they can rival to Google by comparing prices of consumer technology software and devices or by looking for cheap flights to outperform Google. To make sure they increase the market share of Bing, Microsoft merged with Yahoo!'s search activites to compete with Google in a fast past. Yahoo! Mail and Yahoo! currently are little below in percentage of traffic from Google but much more ahead of the game of Bing. So now the question is are these firms perfectly competitive markets? If so, will they have a better change in ruling the search service bussiness.
As Microsoft is willing to spend whatever they need to bet their rival Google, i believe its a tough competition. They will need to do more advertising deals with other firms and by doing that cost money and compromsing. Also Microsoft is in a good stand in the market as far as their software. This compeition may cause sunk cost and DWL in this process, but lets see how far they plan on taking it. As Apple dictates which applications are allowed to run on iPhone, Facebook tries to get their consumers away from surfing other sites on the web. Google on the other hand, has free software only for those users of their operating system smart-phones. Even for myself, I've been using Yahoo! search service for the past couple of years, basically since I knew how to function a computer and surf the web. Today I see many advertising and consumers moving towards Google and Google Mail. As that being said, I till consume to Yahoo! because I'm more adopted to using it and check my email through Yahoo! Mail thats been set up since 2000. Just last week I recently opened a Google email account for Blogger.com. If it wasn't for this class, I would have not. Overall, the rival between Microsoft and Google is causing a web war in the seach service industry and many people are concern if its better for them or not.
Resource and more Information on Economist.com/businessfinance
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