• Financial Times, Tuesday, May 13, 2008 12:16 PM

Even the normally-resigned Eric Schmidt couldn't suppress the urge to gloat (a little) following the breakdown of the Microsoft-Yahoo merger, a move that would have represented Microsoft's "most direct attack yet" on Google's dominance of the online advertising market. "I'm happy to be crowned winner," a smiling Schmidt told Richard Waters. "But as we've learned in the election cycle, it goes back and forth."

Indeed, many analysts and industry watchers declared Google the undisputed winner of the Microhoo row. "The failure of the Microsoft/Yahoo merger eliminates the biggest short-term threat" to Google's dominance, said Harvard Business School professor David Yoffie. Now, Google's momentum "seems unstoppable." Michael Cusumano, management professor at Massachusetts Institute of Technology, describes Google's now-unchallenged dominance even more bluntly: "They're sitting on a goldmine."

But is Google's win really that big? The FT certainly thinks so. By next year, Waters said that precisely half the world's online advertising-projected at $55 billion-will flow through Google's networks. More than two-thirds of that will come from ads running on Google's own Web sites, he said. The other third comes from Google's partners, where it acts as a third party ad server that receives a cut of revenues. That right there is the victory, Waters said. The search and contextual wars are effectively over; the question now is: can Google come to dominate display and online video, too? Through DoubleClick and YouTube, those have become the company's next focus.

Read the whole story at Financial Times »