Google to Yahoo and Microsoft: the $1.65 billion was worth it

Ahh, now you all understand what I meant when I said YouTube is a moat, not a revenue generator. By putting YouTube results into Google’s main engine Google ensures it will have better searches than Yahoo and Microsoft (who were, truth be told, getting damn close to matching Google’s quality). And it does it in a way that Yahoo and Microsoft will not be willing to match. Seriously, can you see an executive at Microsoft advocating putting YouTube videos into Microsoft’s search results? I can’t. That’d be the equivilent of sending traffic to a competitor. It’d be what I advocate at this point, but that explains why I am a stupid blogger and not some multi-millionaire executive.

Anyway, Google just distanced themselves from Yahoo and Microsoft. And they just provided a way to monetize YouTube videos.

I love Google’s strategy. It continues to mess with Microsoft’s strategy. Microsoft still treats each team as something that must make money. Google doesn’t do that. They didn’t care one bit that YouTube didn’t have any revenues. They knew that there’s other ways to make money off of YouTube than to force YouTube to monetize on its own.

Truth be told even I didn’t quite understand just what an impact that the YouTube purchase would have. It’s all very clear now. It also is even more worth putting up with billions of dollars of lawsuits.

If I were at Microsoft now I don’t know what I’d be advocating. Ray Ozzie really has his work cut out for him.

Google just put Microsoft’s Internet strategy in a box. It also explains why Microsoft has put so much effort into Silverlight lately (they need that to build a platform to get out of the box) and, might even explain why the lawyers are sabre rattling about open source. The execs at Microsoft don’t like being put into boxes. That isn’t a place they’ve ever been before.

If Google were playing chess I think they just said “check.”

And you wonder why the rest of the industry is talking about FOG (Fear of Google)?  Exactly.

98 thoughts on “Google to Yahoo and Microsoft: the $1.65 billion was worth it

  1. Kermit said…
    The most idiotic statement I’ve seen from you, Scoble, and that’s saying a lot. Good grief, when you worked at Microsoft, did you actually have a clue as to what was going on there?

    Kermit is correct here. It is obvious that you don’t read computing peer review publications, which you might have missed of what different teams from Microsoft Research are doing. For example, look at the Web & Mining Group’s research selected publications here.

    “Web Search & Mining Group”
    http://research.microsoft.com/wsm/

    It is obvious that Microsoft Research are ahead of Google in terms of knowledge about universal search engine. Universal search is basically extending text search to multimedia data search, which involve computer vision & digital signal processing and these are area that Google are novice in, but Microsoft had done work on those areas in the past. All it needs from Microsoft is to combine those disparate search systems into one, then they have a universal search engine .Also read about this:

    “Text-Search Tricks Speak Volumes in Image Search”
    http://research.microsoft.com/news/featurestories/publish/imagesearch.aspx?0hp=n1

    I believe that the media have also hyped any story from Google, because they think that any word coming out from Google must be true.

  2. Kermit said…
    The most idiotic statement I’ve seen from you, Scoble, and that’s saying a lot. Good grief, when you worked at Microsoft, did you actually have a clue as to what was going on there?

    Kermit is correct here. It is obvious that you don’t read computing peer review publications, which you might have missed of what different teams from Microsoft Research are doing. For example, look at the Web & Mining Group’s research selected publications here.

    “Web Search & Mining Group”
    http://research.microsoft.com/wsm/

    It is obvious that Microsoft Research are ahead of Google in terms of knowledge about universal search engine. Universal search is basically extending text search to multimedia data search, which involve computer vision & digital signal processing and these are area that Google are novice in, but Microsoft had done work on those areas in the past. All it needs from Microsoft is to combine those disparate search systems into one, then they have a universal search engine .Also read about this:

    “Text-Search Tricks Speak Volumes in Image Search”
    http://research.microsoft.com/news/featurestories/publish/imagesearch.aspx?0hp=n1

    I believe that the media have also hyped any story from Google, because they think that any word coming out from Google must be true.

  3. As far as I’m concerned, anything that drives Satansoft ah Microsoft out of business is my knight in shining armor.

  4. As far as I’m concerned, anything that drives Satansoft ah Microsoft out of business is my knight in shining armor.

  5. I think there’s something more fundamental to all of this internet search biz than meets the eye. Advertising revenue is nothing compared to the information gathered by statistically analyzing the searches of millions and millions of consumers. Every time you search for something, you’re telling Google about some desire or curiosity you have in a product, cultural artifact, etc. They can analyze this type of data and understand a great deal about emerging markets. Basically, when people search, they tell these big companies what they are about to go out and buy. I bet the major revenue comes through not by advertising but by using search data to make extremely well-informed investment decisions. Google/Microsoft/Yahoo know exactly when and what to invest money in to, and markets range from real estate to global currency to common stocks. Knowledge is power. The YouTube purchase wasn’t about sending more people to Google search, it was about tacking on smart analysis software in to the back-end of YouTube, learning more about human behavior on-the-fly.

  6. I think there’s something more fundamental to all of this internet search biz than meets the eye. Advertising revenue is nothing compared to the information gathered by statistically analyzing the searches of millions and millions of consumers. Every time you search for something, you’re telling Google about some desire or curiosity you have in a product, cultural artifact, etc. They can analyze this type of data and understand a great deal about emerging markets. Basically, when people search, they tell these big companies what they are about to go out and buy. I bet the major revenue comes through not by advertising but by using search data to make extremely well-informed investment decisions. Google/Microsoft/Yahoo know exactly when and what to invest money in to, and markets range from real estate to global currency to common stocks. Knowledge is power. The YouTube purchase wasn’t about sending more people to Google search, it was about tacking on smart analysis software in to the back-end of YouTube, learning more about human behavior on-the-fly.

  7. What a load of vitriolic comments you’re getting.

    Gee whiz – I would imagine you feel like packing it all in and starting again under an assumed name.

    Perhaps, just for a laugh, you should put some really opinionated stuff on here. Thanks for the laughs. Matt

  8. What a load of vitriolic comments you’re getting.

    Gee whiz – I would imagine you feel like packing it all in and starting again under an assumed name.

    Perhaps, just for a laugh, you should put some really opinionated stuff on here. Thanks for the laughs. Matt

  9. Comments 2, 3 & 4 are from the worst kind of MS Weenies imaginable. I can only imagine they have stock.

  10. Comments 2, 3 & 4 are from the worst kind of MS Weenies imaginable. I can only imagine they have stock.

  11. Neal, get out from under your rock, or your CB radio, or whatever antiquated aparatus it is that you use to amuse yourself. You remind me of my grandmother.

  12. Neal, get out from under your rock, or your CB radio, or whatever antiquated aparatus it is that you use to amuse yourself. You remind me of my grandmother.

  13. Oh, and don’t forget Google’s calculator service… That’s a non-sponsored service so I presume it support David Russell’s point on building brand loyalty.

  14. Oh, and don’t forget Google’s calculator service… That’s a non-sponsored service so I presume it support David Russell’s point on building brand loyalty.

  15. Personally, I like the new word “monetize” but would prefer it to be spelt in English as monetise. It doesn’t seem to look right when written in American.

  16. Personally, I like the new word “monetize” but would prefer it to be spelt in English as monetise. It doesn’t seem to look right when written in American.

  17. That’s what Google does with ALL of its ‘extra’ services – YouTube, Gmail, Google Apps. None of these actually make any money, they are all aimed at increasing loyalty to the Google ‘brand’ and increasing/maintaining Google’s market share in its main search business.

  18. That’s what Google does with ALL of its ‘extra’ services – YouTube, Gmail, Google Apps. None of these actually make any money, they are all aimed at increasing loyalty to the Google ‘brand’ and increasing/maintaining Google’s market share in its main search business.

  19. Well, I do like Google’s purchase of Youtube, I don’t think that they will make any money from it.As a casual user of Yourtube, I like some of the user created content, but the current format of Youtube’s video stream is pretty low quality. I don’t think that Google’s attempt to fully index Youtube’s content will reveal anything other than the vast majority of it’s user’s content is nothing more than Copyright theft. I think that most of the Copyrighted content on Youtube is not fair use, it’s just people to lazy to record a show, or to cheap to buy something they want to watch. We It comes to improving the long term prospects of the web, I’ll take Microsoft’s, or Apple’s money making model over the other models.

  20. Well, I do like Google’s purchase of Youtube, I don’t think that they will make any money from it.As a casual user of Yourtube, I like some of the user created content, but the current format of Youtube’s video stream is pretty low quality. I don’t think that Google’s attempt to fully index Youtube’s content will reveal anything other than the vast majority of it’s user’s content is nothing more than Copyright theft. I think that most of the Copyrighted content on Youtube is not fair use, it’s just people to lazy to record a show, or to cheap to buy something they want to watch. We It comes to improving the long term prospects of the web, I’ll take Microsoft’s, or Apple’s money making model over the other models.

  21. You mean “monetize” is a real word? I thought I was reasonably literate, but I’ve never heard of it. If people want to communicate with the world via the Internet, then surely it would be sensible for them to use English that most people will understand? This is especially true when you consider that the vast majority of web articles are written in English, but a large number of the readers do NOT have English as their first language. They should not be excluded from debate and participation by the use of jargon, slang and awful Americanisations.

  22. You mean “monetize” is a real word? I thought I was reasonably literate, but I’ve never heard of it. If people want to communicate with the world via the Internet, then surely it would be sensible for them to use English that most people will understand? This is especially true when you consider that the vast majority of web articles are written in English, but a large number of the readers do NOT have English as their first language. They should not be excluded from debate and participation by the use of jargon, slang and awful Americanisations.

  23. I’m not as clever as half the commentators on here, but isn’t this whole Google/You Tube thing a bit like describing a wank as a “hot session, with someone who’s really into me, and will do ANYTHING I want” with the guys next day at work?

  24. I’m not as clever as half the commentators on here, but isn’t this whole Google/You Tube thing a bit like describing a wank as a “hot session, with someone who’s really into me, and will do ANYTHING I want” with the guys next day at work?

  25. monetize |ˌmʌnɪtʌɪz| verb [ trans. ] convert into or express in the form of currency. • [usu. as adj. ] ( monetized) adapt (a society) to the use of money : a fully monetized society. DERIVATIVES monetization |-ˌzeɪʃ(ə)n| noun ORIGIN late 19th cent.: from French monétiser, from Latin moneta ‘money.’

  26. monetize |ˌmʌnɪtʌɪz| verb [ trans. ] convert into or express in the form of currency. • [usu. as adj. ] ( monetized) adapt (a society) to the use of money : a fully monetized society. DERIVATIVES monetization |-ˌzeɪʃ(ə)n| noun ORIGIN late 19th cent.: from French monétiser, from Latin moneta ‘money.’

  27. I am in two minds about the merging of search ‘streams’ into one super search. My first thought was that I do not want irrelevant videos/images/etc interwoven with the results that I want. Why? because I am sceptical of the search engine being able to second guess what I want from a particular set of keywords. The second thing I thought was, if it works then it will save me time from having to swap between various streams thus saving me time + money.

    But I cannot question that it is a stroke of genius (and forsite) and anyone saying ‘it was obvious’ are the same who say ‘I could have thought of that’.

    My own real concern is that Google is not showing signs of improving relevancy calculation, because of ‘over linking’ search results are becoming twisted, and although Google continue make the ‘good fight’ I await to see what the next generation of technology is that improves the results themselves. But for the minute Google are still way out in the lead, so who can catch up?

  28. I am in two minds about the merging of search ‘streams’ into one super search. My first thought was that I do not want irrelevant videos/images/etc interwoven with the results that I want. Why? because I am sceptical of the search engine being able to second guess what I want from a particular set of keywords. The second thing I thought was, if it works then it will save me time from having to swap between various streams thus saving me time + money.

    But I cannot question that it is a stroke of genius (and forsite) and anyone saying ‘it was obvious’ are the same who say ‘I could have thought of that’.

    My own real concern is that Google is not showing signs of improving relevancy calculation, because of ‘over linking’ search results are becoming twisted, and although Google continue make the ‘good fight’ I await to see what the next generation of technology is that improves the results themselves. But for the minute Google are still way out in the lead, so who can catch up?

  29. “But, to interest Wall Street you have to show you have something new and exciting that could explode onto the market every few years.”

    This is true – and since Wall Street has been worried that Google is a one-trick pony, slightly improving search/ad by integrating another big site into their results may not be the new and exciting source of revenue that Wall Street might have imagined possible when YouTube was acquired.

  30. “But, to interest Wall Street you have to show you have something new and exciting that could explode onto the market every few years.”

    This is true – and since Wall Street has been worried that Google is a one-trick pony, slightly improving search/ad by integrating another big site into their results may not be the new and exciting source of revenue that Wall Street might have imagined possible when YouTube was acquired.

  31. This is a blog entry for blog entries sake. It has no real value or worth and doesn’t contribute to anything.

    What is ‘monetize’?

  32. This is a blog entry for blog entries sake. It has no real value or worth and doesn’t contribute to anything.

    What is ‘monetize’?

  33. The inevitable backlash against Google wont be long, and with Firefox usage on the rise I think that will mean more people blocking out adverts, which does render Google’s whole revenue platform slightly useless.
    As for MS always needing to make money, tell that the the guys who were on the XBox1 team!

  34. The inevitable backlash against Google wont be long, and with Firefox usage on the rise I think that will mean more people blocking out adverts, which does render Google’s whole revenue platform slightly useless.
    As for MS always needing to make money, tell that the the guys who were on the XBox1 team!

  35. Google’s search engine offers a much greater market than MSN and Yahoo, with or without youtube.

    Its wins on simplicity.

    When you search for something, 99% of the ppl do not need other rubbish infos like news, weather, games, music etc. They just need clear and smart results. Even if they wanted to be entertained, many knows of websites specializing in those services.

    That is why no matter how much more features Yahoo and MSN add, or how their results matches those of Google,s they still can’t beat the giant

  36. Google’s search engine offers a much greater market than MSN and Yahoo, with or without youtube.

    Its wins on simplicity.

    When you search for something, 99% of the ppl do not need other rubbish infos like news, weather, games, music etc. They just need clear and smart results. Even if they wanted to be entertained, many knows of websites specializing in those services.

    That is why no matter how much more features Yahoo and MSN add, or how their results matches those of Google,s they still can’t beat the giant

  37. All this is pretty superfluous really, I mean, the internet is still only the internet at the end of the day. I’m sure most people have other uses for their computers than searching Google, Microsoft or whoever, I know I do. Besides, I think it’s high time that Microsoft et al stop trying to assume ownership of the internet, it’s rediculous. I also agree with Neal, who really cares if YouTube is returned in Google search results, I do hope Google give us the option to turn that ‘feature’ off.

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