June 04, 2008 | Wednesday

Microsoft casts its net again

It’s not all over yet in Microsoft’s pursuit of Yahoo, but time is running out for a challenge to Google, the big fish in the search sea.

No one in the information industry thought that Microsoft’s withdrawal of its offer in early May to buy Yahoo for $4.3bn was the end of the affair. And it wasn’t: a fortnight later the IT giant announced that it had raised with the search company “an alternative that would involve a transaction with Yahoo but not an acquisition”.

The original rationale for the deal is still alive and kicking, namely Microsoft’s desire to improve and expand its online services and advertising business. In short, Microsoft wants Yahoo’s traffic while Yahoo could do with a better advertising model.

Something has to give, and soon, or both Microsoft and Yahoo could be in for a rocky time.

There are several schools of thought. Some people think that over the next six months Microsoft will probably mount another aggressive takeover bid for Yahoo. François Bourdoncle, the founder of enterprise search engine Exalead, said: “Microsoft must buy Yahoo or kill it. But that won’t be easy.”

Others suggest there are viable tie-up opportunities for Microsoft out there other than Yahoo; and that Microsoft dropped the bid not as a hard-nosed negotiating tactic but because it really had changed its mind about the value of Yahoo to the future of Microsoft.

Mobile search

Richard Gregory, chief operating officer of digital marketing agency Latitude, said: “Microsoft has a sophisticated view of search and is casting its net wider in the long term for more mobile search technology; it’s a long way off but it’s still part of the plan.

“To my mind Ask would have been a better buy for Microsoft than Yahoo, whose market share has been declining for some years.”

Yahoo could get out of the hole it is in by buying Google’s advertising system model: it’s the only viable internet business model around.

Clem Chambers, CEO of stocks and investment website ADVFN, said: “It’s understandable that Yahoo is on the ropes and lining up to take on Google’s AdWords system rather than use the one it paid billions of dollars for.

“But if Yahoo gets into bed with Google it will result in Google’s stranglehold over the market tightening. A monopoly is no good for anyone as it means fewer negotiating powers for other market players to grow and evolve.”

The power of Google is a key element in all calculations. “If Yahoo does a deal with Google, then Microsoft is in real trouble,” said Bourdoncle.

Chambers is another who doesn’t rate Microsoft’s chances. “In the battle of the giants, the dinosaur is clear: Microsoft,” he said.

But there is also a sense that Google may be growing overmighty.

“If we only have one system, then we have no negotiation powers and are bound by Google’s terms, which is in fact already the reality,” said Bourdoncle. “It’ll make things harder for web businesses, even the larger brands. Google will take an increasingly larger piece of cake and no one will be able to compete.”

And where would that leave information professionals? They’re already feeding the Google phenomenon by producing ‘free food’ for it.

“We will enter an age where publishers and editors are subcontractors for Google,” warned Bourdoncle. “We aren’t far from that. It’s happened very quickly.”

But search engines are undeniably good for information providers as they widen their audience. It’s up to information professionals to ensure that their presence is strong on the web and they stand out from the crowd.

Melanie Goodie of TFPL said that libraries and other representatives of information professionals needed to push the government to ensure that search skills were taught in schools and higher education institutes. Otherwise basic critical and analytical information assessment skills could be lost.

Uncritical search

This is already a worrying issue for information professionals, particularly following the publication of a study by the CIBER research team at University College London which showed that although young people had an ease and familiarity with computers, they relied too heavily on search engines, viewed rather than read, and lacked the critical and analytical skills to assess the information they found on the web.

In their current form, search engines offer only generic responses to search questions, directing the user to more specialist sources where appropriate, such as the British Library or the BBC website if the user is looking for something more specific.

This is perhaps where Yahoo or Microsoft could differentiate themselves from Google by offering more vertical search, Gregory suggested.

“Google has been an amazing success story but it’s not a search panacea,” he said. “In vertical search, for example, it is not very good.”

There’s a clear need for more quality accreditation of data on the internet, especially for the younger generation, which has grown up with the internet and never had to use physical libraries where sources are clearly credited.

Still, the amount of free information now available on the web is working in favour of information professionals because users feel overwhelmed by information and want more targeted, relevant data at their fingertips.

Search is still evolving and in an increasingly knowledge-based economy such as the UK’s we will need more sophisticated technology to find what it is we’re looking for.

To ensure your information is the first port of call for your users – and the search engines – you need to make sure that data is of high quality and drawn from credible and respected sources. Without quality data, the search engines are nothing.

Michelle Perry, Information World Review, 4th June 2008