Microsoft (MSFT) Talks Trash About Google (GOOG)

March 7, 2008 by Douglas A. McIntyre

Microsoft (NASDAQ: MSFT) is going to take significant market share from Google (NASDAQ: GOOG) and cut the search company’s lead as the most successful internet company in the world, with or without a buy-out of Yahoo! (NASDAQ: YHOO). Thus says Steve Ballmer.

"So it may be my last breath at Microsoft, but we’re going to be there, working away, building share," said Ballmer according to Reuters. He also defending the company’s bid for Yahoo! as the best way for both companies to challenge Google.

The most revealing thing about the comments from the Microsoft CEO is that he plans to chase Google under any circumstance. That raises the question of how much Redmond is willing to spend to be a strong No. 2 in search.

One way to look at Microsoft’s plan for picking up a larger part of the internet audience is that it is willing to spend $44 billion to buy Yahoo!. But, if the Yahoo! deal does not work, that leaves Microsoft with a huge pool of capital to move its position forward.

It is not beyond the realm of possibility that Microsoft would put several billion dollars into R&D to improve its own search technology. It is also likely that the company would be willing to invest hundreds of millions of dollars to build traffic to its MSN brand.

One of the most troubling aspects of the Microsoft culture, for both investors and competitors, is that it will spend a seemingly endless amount of money to move itself to the front of the line in industries where it wants to play. The Xbox may be the best example of that. The losses it has taken in its online businesses over the years is another.

Doubting Microsoft’s resolve to cut away at Google’s lead would be a mistake. Ballmer is clearly ready to spend his billions whether he gets his merger or not. He likes wars of attrition because he has won so many of them

Douglas A. McIntyre

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