Search Wars

M & A activity in the ‘Search’ space continues to grip global investor interest.

The two big plays at present are Google’s proposed acquisition of Double Click and Microsoft’s tilt at Yahoo! Are these just the short-term realignments and positioning of major market players, or a signal of more significant developments ahead?

Ask the owners of traditional news and published content. Working with Google, Yahoo! and Microsoft (MSN) has in the past provided these content owners with some legitimate monetising of their IP. That was the basis of the relationship. Are times changing however?

Google, in particular, has been aggressively moving into the content space; text-based, mobile-based and video-based. YouTube, its video sharing arm, is currently facing potential legal action on a number of fronts for the unauthorised display of third party content on its site. Facing a $1 billion lawsuit from Viacom over copyrighted material, Google has claimed it is protected by the Digital Millennium Copyright Act. According to Google, by hosting content provided by others, the law's Safe Harbor provision protects it from liability so long as they act fast to remove copyrighted content once the owner notifies them. Viacom has rejected this claim.

The question surely being asked is: ‘When does an online search partner start to become an online competitor?’ Traditional news and content publishers have already seen some historic revenue streams cannibalised by online portals. Think Craiglist in the States or Trademe in New Zealand.

My own view is that the current M & A activity is the prelude to a much bigger play. The control of content and its dissemination is an end game with potentially huge rewards going to the victor. I suspect that battle has just been joined.