It was a very intense 90 minutes that forced me to really think through this whole deal for several days prior to the call. I think it's a terrible idea that will be really bad for everybody except Microsoft. Funny how Microsoft is involved in a deal like that, eh?
Want to know why I think that? You're going to have to keep reading. (If you don't care, I'll meet you in the bar for that gin in 10 minutes...)
The first piece I'll address is that, in my opinion, this is truly an anti-competitive deal. Currently we have three main search engines. That's three opportunities to be in the top 10 somewhere. Two of those opportunities are certainly smaller than the other one -- but how does changing that to two opportunities help competition? Retailers will now be fighting over less real estate, and consumers will have fewer selections. Clearly I'm assuming that Microsoft is simply going to bolt their search technology onto Yahoo.com and return similar if not exactly the same results as they do on bing.com. This could have been easily fixed if Yahoo had kept Search Submit Pro. Microsoft would have gained the market share they wanted, Yahoo would still have different enough results to keep the game interesting, and there would be a solid revenue stream in the mix as well.
Next, one of Microsoft's big arguments for why all of this is a good idea is that it will drive innovation by forcing everyone to move faster. Hold on here... Microsoft? Innovation? Bing is the culmination of years of work and billions of dollars of spending. Sure, it's better than anything Microsoft has done so far, but I'd hardly call anything there innovative right now. Meanwhile, Google is launching new features and innovations like crazy. In fact Social Search launched just this week, and Google's beginning to roll its new music search based on a deal with Rhapsody.
I simply don't see how consolidating the bottom of the market will innovate anything. Remember, the bottom of the market features two very large, very slow-moving companies that have made notoriously bad decisions in the past few years.
Lastly, four of the biggest names in marketing banded together and wrote a letter expressing support for the deal. Shouldn't that be enough to make us all sit up and scratch our heads? Sir Martin Sorrell, John Wren, Michael I. Roth and Maurice Levy all think this is a good idea. Why? Well. That's the easy part. If this deal goes through, bid prices are going to go up for PPC, and bid management is going to be easier and cheaper on two platforms instead of three. These super-rich guys will become even super-richer.
This deal is good for SEOs and SEMs because we will get to charge more. I like that.
This deal is bad for retailers and consumers because it shrinks the ad market and ultimately offers consumers less choice. I dislike that more.
My prediction for all of this? When the dust settles, Google will pick up at least another 7% of the market.