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How Google ended Microsoft’s Yahoo search

May 08, 2008 | Internet Marketing

Google played a part in killing the deal, for now at least, by acting more as friend than foe. It offered to let Yahoo use its more sophisticated search advertising technology, which by some estimates would have meant $1 billion in additional cash flow a year for Yahoo.

Not surprisingly, analysts are saying the Microsoft-Yahoo story has one clear winner: Google. And its stock price reflected that thinking Monday. More than $4 billion was added to Google’s value as the stock price rose 2.34 percent.

Not yet 10 years old, Google has emerged as a powerhouse that is wielding tremendous power in the world of technology and beyond. It was able to influence a government auction of broadcast spectrum. It nudged several cellphone companies into opening up their networks to the phones of rivals.

Its influence is all the more surprising, because its economic power is still derived largely from a single, seemingly prosaic business: the ability to place interesting text advertisements in front of people when they do searches. Advertisers pay for those ads — sometimes $1 or less — only when users click on them. In a sense, Google has built a highly profitable $16.6 billion empire a dollar at a time.

Get the full story at The New York Times

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