IT Week

Who was it who said: “I believe that sleeping behemoth MSN has far more reason than Google to be worried about Yahoo’s expansion”?

If only Microsoft had read David Neal’s column of five years ago more attentively, perhaps it could have saved both firms a lot of fury.

It was a time of search engine experiment and expansion, and real money was changing hands. Yahoo “splashed out $1.6bn for Overture, a company that takes cash from corporate customers in exchange for placing them higher on search listings”, and that brought with it ownership of Alta Vista and Fast.

At the time, IT Week had these sage words for MSN: “The solution for MSN is as simple as pulling a few notes out of its bulging wallet…” So why didn’t MSN take IT Week’s advice?

Obviously, the light has dawned since, with Microsoft attempting to buy Yahoo and all its attributes; and obviously, the directors of Yahoo must now be pretty close to biting their hands off with frustration at having missed the opportunity to be bought for real money. Certainly, if I were a major shareholder, I’d be looking for blood, as the share price tumbles and the money I would have made gets comparatively greater every day.

But at the time, I think MSN’s bosses were having other issues. Today, it’s clear that it’s entirely wrong to put MSN and Live into the drawer marked “Microsoft”, and that there is more rivalry between those two than there is between Microsoft and Yahoo – but five years ago, the battle lines were not yet drawn that clearly.

Also, I suspect, the dream that is currently infesting the thoughts of Redmond – that Microsoft can live off advertising instead of software sales – was more accurately seen back then as being silly.

There is a lot of money in advertising, of course. But equally, there are a lot of people chasing that money, and already the more astute market watchers are warning that most ad-supported business plans are fantasies.

And while in a time of economic downturn, sales of software may flag, they will be positively gold-plated compared with ad revenues.