For all the complaining about these three tech titans, they're locked in fierce competition with each other. This chart doesn't even mention other players in the vibrantly competitive online ecosystem, like Facebook, Yahoo!, Twitter, and countless others. Makes you want to go spend a weekend playing an endless game of Risk, Axis & Allies or Supremacy with your best frenemies, doesn't it? But of course, the board game analogy only goes so far, because today's battlelines and players are only a snapshot of a long-term process of dynamic, highly rivalrous competition. But as Adam and I noted in our Forbes.com piece last fall calling for quick approval of Microsoft's search partnership with Yahoo!:
Alas, regulators seem stuck in the past. European officials in particular seem hell-bent on continuing the antitrust crusade of the '90s against Microsoft, myopically focused on fading paradigms (desktop operating systems and Web browsers). But instead of narrowly defining high-tech markets based on yesterday's technologies or market structures, policymakers should embrace the one constant of the Internet economy: dynamic, disruptive and irrepressible change.
Innovation isn't just transforming the way we use the Web, it's rapidly changing the competitive landscape too. Some of the predictions of the '90s are finally coming true: Browsers have morphed into platforms for applications including e-mail, word processing and real-time collaboration. A decade ago, few would have predicted Google would build its own browser, turn that browser into an operating system, build an OS for smart phones, or go head-to-head with Microsoft Office. And the idea that Microsoft would ever take Office into the cloud was at one point unthinkable, but that's happening now too. Meanwhile Google, and more recently Microsoft, have become full-fledged advertising companies-in competition with traditional media giants. Again, no one saw this coming.
The Yahoo!/Microsoft pact is just the latest pairing of Web 1.0 titans struggling to reinvent themselves and compete with Google, a titan that still thinks of itself as a start-up. All three companies will struggle to meet new challenges as search evolves toward the social (reflecting what your friends like), the semantic (reflecting the precise, rather than presumed, meanings of Web content), the personalized (reflecting your own preferences) and the interactive (including user-generated comments or reviews).