Krishna Srinivasan’s Blog

The Justice Department has opened a formal antitrust investigation into a deal struck last month that would allow the Internet titan Google to provide some search advertising for Yahoo, according to sources familiar with the inquiry.
Investigators are planning to demand documents not only from Google and Yahoo, but also from other large companies in the Internet and media industries, said the sources, who spoke on condition of anonymity because the investigation is ongoing.

Google and Yahoo officials have said since the deal’s announcement that they would delay its implementation for a voluntary Justice Department review. But a formal investigation signals that the department may have found some cause for concern. More>>

As rumored last week, Microsoft, with the notion of a Yahoo deal receding quickly in the rear-view mirror, is taking another tack in its efforts to stem the dominance of Google search — rather than playing catch up, it wants to try leapfrog. Today, Microsoft confirmed an agreement to buy Powerset, one of the leaders in semantic search, which attempts to glean the context and intent of a search rather than just matching keywords against the content of ranked pages. Details of the deal weren’t revealed, but the price is rumored to be in the $100 million neighborhood. “We’re buying Powerset first and foremost because we’re impressed with the people there,” Microsoft’s Live Search blog said. “We came away impressed by their smarts, their experience, their passion for search, and a shared vision. That shared vision is to take Search to the next level by adding understanding of the intent and meaning behind the words in searches and webpages.”

There are challenges aplenty in the strategy. Semantic search is a non-trivial exercise involving the honing of the technology and the re-indexing of the searchable Web, and semantic analysis of a page is much more computing-intensive than simply scanning text. On its own, Powerset had been limited to demonstrating its proof of concept in searches through the finite world of Wikipedia. Microsoft has the infrastructure and the war chest to expand that reach, first, perhaps, in vertical search categories where semantic search has done the best so far. It will be a while before the success of this approach can be judged, and there’s always the chance that Google might innovate or buy its way into the same territory, but Microsoft needed to do something to try to pull its search share out of single digits, and this looks like as good a bet as any. “Microsoft’s acquisition of Powerset makes perfect sense and is probably the best shot at a disruptive technology that might allow it to leapfrog Google,” said Andrei Hagiu, assistant professor of strategy, focusing on technology, at Harvard Business School.

For years the big problem with Flash-based websites is that they could not be properly indexed by search engines. Flash websites have been favored by marketers and advertisers for a long time, because of the ability to create rich, interactive Web experiences. However for most other businesses, particularly those with a lot of information on their website (let’s face it, that’s everyone except marketers and advertisers), Flash has been nearly an automatic ‘no’ for website development. That may be about to change.

Adobe announced today that it is teaming up with major search engines - notably Google and Yahoo - to “dramatically improve search results of dynamic Web content and rich Internet applications (RIAs).” In a press statement, Adobe said that it is “providing optimized Adobe Flash Player technology to Google and Yahoo! to enhance search engine indexing of the Flash file format (SWF) and uncover information that is currently undiscoverable by search engines.”

Adobe claims that it will provide more relevant search results and rankings for RIA content. In a separate blog post, Google announced that it has launched a “Flash indexing algorithm”, which will result in better search results. More>>

Microsoft is pushing hard to stop Google from teaming up with Yahoo now that the software giant has given up on acquiring the tarnished Internet portal. But antitrust lawyers and technology analysts outside the case don’t think Ballmer & Co. has much of a prayer at stopping the deal from going through.

Microsoft (MSFT, Fortune 500) intends to put up a strong fight nonetheless. The company is on a mission to derail or delay Google’s deal to outsource a portion of its ads on Yahoo. The company says it’s still interested in buying just Yahoo’s search business. Microsoft has deployed its lawyers and Washington staff to meet with lawmakers to discuss how Google will monopolize search advertising and drive up prices through its new Yahoo partnership.More>>

Ten years ago this coming September, two Stanford University doctoral students — one of them a Michigan native — launched a business that would revolutionize how millions of people use the Internet.

Yes, Google is getting older, at least in tech years.

But don’t expect the world’s dominant search engine company to remain content with the enormous success it has achieved so far.

Google is rolling out innovative features that will allow users to search the Web more efficiently. It is also looking to expand its advertising reach, focusing on the folks who do their queries via mobile phones and car-based systems. Google has been increasing its spending on research and development, which totaled $2.1 billion last year alone.

The company has come a long way since Sergey Brin and Michigan native Larry Page started Google in a garage in Menlo Park, Calif. One of the most feared and respected technology giants in the world, Google earned $4.2 billion in profits last year and employs nearly 17,000 workers, including more than 262 at ad sales and support offices in Ann Arbor and Birmingham.More>>

With Nokia’s acquisition of Symbian, it is going head-to-head with Google Android and Windows Mobile to make a run at building the top software platform for mobile phones. The problem is that all three of them could be making some bad assumptions about the way the mobile phone market — particularly the smartphone market — is going to unfold over the next five to ten years.

They all seem to be assuming that the mobile phone market will mirror the computer market, which is dominated by a small handful of platforms: Windows, Mac OS X, and Linux. The reality is that there is likely to be a much larger diversity of platforms in the mobile world.

In addition to Android, Symbian, and Windows Mobile, there is now the iPhone with its OS X-based platform. And, beyond those four, there’s a plethora of phone makers that run their own proprietary operating systems on a variety of phones, sometimes with a customized OS for each phone.

It’s going to be very hard to put the genie back on the bottle in the phone market. All of these different types of phones are already out there and will be in use for years to come. Some may argue that the smartphone market does not have as many players as the general mobile market, but the lines are blurring between standard mobile phones and smartphones.More>>

Google seems to have landed a big-ticket contract for issuing Gmail accounts to some 1.3-million students in schools in Australia. Which also means Gmail accounts will now oust existing Microsoft Outlook or Exchange accounts of these students.

The three-years contract is worth nearly $9.5 million; Google, in partnership with SMS Management & Technology and Telstra, will supply the New South Wales (NSW) Department of Education a customized Gmail version that bundles Google Apps. With this contract, Google has succeeded in migrating Microsoft Outlook/Exchange users to its Google Applications and Gmail. For the NSW Department of Education, it’s a win-win as the existing Microsoft Outlook/Exchange system costed a bomb, i.e. $33 million.

The other big story is that an upstart named LimitNone (start-up) has sued Google for allegedly ‘copying’ their email switching tool. LimitNone has alleged that while it shared trade secrets of its email switching tool (gMove) with Google engineers, sales executives, customers, Google quietly went and developed an ‘almost identical’ tool, subsequently jumping into the fray itself.

For those who never used it, Google Browser Sync was a Firefox extension that synchronized your bookmarks, web history, browser sessions and passwords across multiple computers by temporarily saving them to Google’s servers. According to the Google Browser Sync team: ‘It was a tough call, but we decided to phase out support for Browser Sync. Since the team has moved on to other projects that are keeping them busy, we don’t have time to update the extension to work with Firefox 3 or to continue to maintain it.’ For all of those who fell in love with Google’s Browser Sync, our only hope now is to resort to poorly maintained 3rd party extensions without Google’s blessing.”

Yahoo and Google have confirmed that they are indeed entering into a partnership around search advertising, a story we broke earlier today. Google’s blog post on the agreement is here.

—The deal is non-exclusive. Yahoo will be able to run Google ads alongside Yahoo ads or other ad providers.
—The deal is expected to add $800 million a year in revenues and $250 million to $450 million in operating cash flow.
—The deal only applies to paid search and contextual ads, not to algorithmic search.

This arrangement will no doubt intensify the scrutiny from Washington, where the Justice Department has already launched an investigation into antitrust issues arising from Yahoo and Google merely testing the waters for today’s partnership. Congress might want to hold hearings as well. Back in April, Citi analyst Mark Mahaney estimated that a Google deal could increase Yahoo’s cash flows by more than $1 billion a year. It turns it will be less than that. But given the antitrust scrutiny, the deal is necessarily structured in a creative way. As part of the deal, Yahoo can decide to go with Google only for those search queries where it will get the most bang for the buck.

On Wednesday, when asked by Fox News about the antitrust issues surrounding a possible search deal with Yahoo, Schmidt responded:

Well you are presuming that there’s an issue there.

If there were an issue, it’s perfectly possible that you can do commercial deals that look like outsourcing deals which are not exclusive and where industry structures allow everybody to win. If you look in the automobile industry and lots and lots of industries like that, you have suppliers who supply other people. So if there were a deal, it would be based on those sorts of principles.

As long as the relationship is competitive, it might pass regulatory scrutiny. That is, if Microsoft can bid for Yahoo’s search advertising business as well, then whoever can deliver the most cash to Yahoo will win the business. In reality, we all know who that will be: Google. Neither Microsoft nor Yahoo can match the search dollars that Google can deliver.

Adobe’s free online collaboration suite seeks to make inroads against Google Apps and Microsoft Office Live Workspace.

Google isn’t the only large software maker looking to replace Microsoft’s on-premise Office and SharePoint productivity and collaboration suites with hosted, online versions of similar applications.

Adobe Systems June 2 made its Acrobat.com suite of word processing, file-sharing and Web conferencing software available as public beta for free. The software was released in conjunction with the launch of Adobe Acrobat 9.

An alternative to Google Docs, Buzzword is a Web-based word processor users can co-author and share documents for comment and review.More>>