Microsoft, Yahoo! and Google: Giants in combat

Microsoft should be allowed to buy Yahoo! — and Google should be free to fight backThis was the week that seemed to confirm the new balance of power in the technology industry. Computing is moving online, away from the desktop — and away from Microsoft, the desktop-software leviathan, to Google, master of online search. Microsoft’s determination not to lose the struggle became clear when it bid $44.6 billion in cash and shares for Yahoo!, an ailing internet giant (see article). If the deal goes ahead, it will reshape the technology industry and clear the way for a straight fight between Microsoft and Google for dominance in the internet era. But whether Microsoft’s bid succeeds or fails, it changes how all three firms are perceived.Yahoo!’s status as the also-ran that seemed poised to inherit the internet, but failed to keep up with the changing technological times, is cemented. Microsoft, which has never made an acquisition on anything like this scale, has in effect conceded that it cannot compete with Google on its own; its bid highlights its own weakness almost as much as Yahoo!’s. Meanwhile, Google’s objections to the proposed deal on antitrust grounds — even though the combination of Microsoft and Yahoo! would still trail far behind it in both internet search and advertising — show that the firm has failed to grasp that it, not Microsoft, is now regarded as the industry’s Goliath.

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