Microsoft

The giants butt heads again, with Microsoft grudgingly agreeing to change how default search is set up in Vista after the Justice Department sided with Google over an antitrust complaint. The grounds — that the current setup limits alternative desktop search engines — may sound a little funny from a company earning their own antitrust accusations, but Microsoft’s reputation (and 2002 antitrust settlement) continues to haunt them and they appear to have lost yet a little more ground to their behemothic competitor.

Using Vista? Expect a patch or service pack addressing the search feature to be available by year’s end.

Things have been hot for online advertising companies. Google bought DoubleClick for $3.1 billion, followed by Yahoo’s $650 million purchase of Right Media. Now Microsoft jumps to prove they’re not out of the online advertising game with a whopping $6 billion purchase of aQuantive in a move to expand their breadth of paid opportunities on web sites, Internet television, video on demand, and other places online.

While Google, Yahoo and MSN all run their own competing search engines with paid opportunities on these engines, the acquisition of these networks shows their vision of a future dominated by new forms of advertising. While paid search is now paid on a per-click basis, the ability to leverage banner ads and ads within rich media offers advertisers the ability to say a whole lot more to their desired audience. To be seen is how much search engines use data about user searches to correspond ads to likely targets — the ability to hone in on target markets is extremely alluring to advertisers, and feared by privacy advocates (Google, at least, says they do not intend to use their search data to improve ad targeting).

Whether the aQuantive purchase will solidify a rather rocky position for Microsoft’s online advertising portals waits to be seen, but the commitment of the Redmond giant to not be outpaced in the industry is clear. And with billions of advertising dollars on the tables, the stakes have never been higher.

For anyone keeping up with tech/industry news, this week has been a non-stop bout of fascinating, possibly ground-breaking news. What does it have to do with search? Well, potentially quite a lot.

First on the chopping block was talk of a potential takeover of Dow Jones (publisher of the Wall Street Journal) by Rupert Murdoch’s News Corp. About as soon as this landslide of a story hit, rumors buzzed that Google was also considering a takeover. Regardless of what actually happens here, the idea that a sale of this magnitude is even being considered points to the radical changes in power of print and online media.

Speaking of Google, competitors Microsoft and Yahoo are trying as ever to find ways to dethrone the ubiquitous search engine. While $50 billion is no slim price tag, the takeover of Yahoo by Microsoft would certainly escalate the search engine wars to a level we’ve yet to experience. With Google recently declared #1 web property, Microsoft is obviously going to do whatever it takes to secure their presence again.

Finally, democratic news-site Digg got to experience how determined people are to make information freely accessible on the Internet. The short news byte — Digg pulled stories publishing a hack to HD-DVD encryption after receiving a cease-and-desist letter by copyright holders, and the users were offended enough to go to great extremes to publicize the hack regardless. In fact, the sudden case of censorship resorted in the sensitive information suddenly becoming one of the most popular stories on the Internet. Digg, at length, rescinded their position and now vows to stand by even if the case goes to court.

What this all points to (connecting a variety of dots here) is the increasing importance of the Internet and the phenomenal shift in power from printed, editor-reviewed content to rapidly propagatable, user-controlled media that with very little monitoring can influence hundreds of thousands. And what a terrifying and incredible ride it is.

Well, it’s no news that Yahoo, among others, is fighting for its life against the megalithic efforts of Google. The ink just dried on Google’s $3 billion buy of the Doubleclick ad network and they’ve officially announced a Powerpoint-clone program to join their already beefy hosted office software suite. They’re being innovative and aggressive enough that Microsoft has accused Google of becoming a monopoly. Which is not necessarily incorrect, just funny.

In a desperate fight for life, Yahoo has taken several aggressive initiatives of their own — notably, the so-far-successful new Panama ad-platform — and most recently, a push to extend their ad network into a variety of newspapers’ web sites and now a partnership with PayPal to add branded buttons to their sponsored search listings.

The water’s definitely starting to get hot, due in no small part to projections that spending on paid search is projected to increase by 17% this year. With more traditional advertisers catching on to the power (and impressive ROI) of paid search, the market is growing at an incredible rate and everyone wants part of Google’s enormous pie. Whether or not Google is becoming a monopoly, they are very steering the way of the web and have the technology, innovative people, and singular vision to do it. And for the moment, it’s forcing everyone else to try some interesting tricks to catch up.