Microsoft-Yahoo Might Spark Needed Debate

After waking up to the news of Microsoft’s $44.6-billion bid for Yahoo!, our morning cappuccino had barely cooled when Sen. Herb Kohl (D-WI) announced the Senate Antitrust Committee he chairs would scrutinize the proposed buy. Regulator interest is to be expected. And while any undue government interference in the deal would be unwelcome, I think we’re due for a debate about which companies, in 2008, are the most influential players in the digital economy and what their relative strengths and weaknesses might be. The first fact that will rock many in the government regulatory establishment is that, unlike the past, Microsoft approaches the deal from a position of weakness. However strong the Redmond, Wash., giant might be in PC operating systems, this deal is an attempt to shore up its sagging on-line and search engine businesses, which are second to Google. Yahoo, its target, ranks third. I am hopeful that, as the merger proceeds over the course of the next few months, lawmakers and public gets a better understanding of the changes the search engine industry is bringing to media, advertising and what in the past has been called audience research, but now involves crunching data correlating Internet usage, search keywords, online purchases and downloads. For starters, see Adam Thierer’s research at Technology Liberation Front.