Tuesday, May 2, 2006

So Much for Googlezon: Amazon Opts for Microsoft, Drops Google Deal

If Google's elementary school report card would have a note from the teacher it would probably read "doesn't play well with others." On the other hand Microsoft's report card would probably say "plays hard with others, but at least they play." Danny Sullivan at Search Engine Watch has the best links and summary coverage of the quiet but profound split between Google and Amazon, a shift that opens another front in the rapidly escalating battle between Microsoft and Google. Instead of Google search results for Web content on Amazon's A9.com search engine one now gets results from Microsoft's Live.com search engine. There are also reports that AdSense ads have been pulled from Amazon.com pages. For people who were wondering a month ago why Google is preparing to raise another USD 2.1 billion in a new stock offering the Washington Post has the answer: Microsoft has earmarked more than USD 2.4 billion in its aggressive drive to establish a stronger position against Google and other major online rivals. Google guessed the amount pretty well, it would seem, and wanted to factor it in to their investment plans.

While Google's direct revenues from Amazon were relatively minimal, the symbiosis between the two companies appeared to be significant - until Google started getting up the dander of publishers with its book scanning efforts and Yahoo and Microsoft started to get friendlier with them via the Open Content Alliance. With book publishers becoming more aggressive at managing the online packaging of their products it is good for Amazon in the short run to work with partners that will not be bogged down by chilly relations with publishers. But the other significant piece of the puzzle picked up by paidContent.org is Google being swapped out as the search engine of choice for Amazon's Alexa.com portal, which serves up not only stats on Web sites but also houses a major archive of Web content that Alexa makes available to Web application developers (see our earlier weblog entry). This sets the stage for Microsoft to play a more aggressive role in developing mash-ups and other value-add applications with archived Web content. There's no doubt about it - this is a full-scale war that will be waged relentlessly on all fronts.

How will this actually pan out in the long run? In the WaPo article A9's David Tennenhouse was rather hedged in his statements:
"Our engineers have done some testing and evaluation, and overall we concluded this was an interesting option to discover information," said David Tennenhouse, chief executive of A9, a subsidiary of Amazon.com that provides search and mapping results.

Asked whether Microsoft's search engine is better than Google's, Tennenhouse said, "It will be up to users to try that out."

This could just be what Amazon felt comfortable letting out, but it seems to imply that this change is being done for business reasons more than anything relating to the technical performance of Google. If Microsoft succeeds in helping Amazon grow the deal will probably be called one of the more shrewd turnabouts in recent online memory. But if not, then there appears to be enough long-established goodwill between Google and Amazon to re-open the relationship should things not work out too well with Microsoft. Goodwill will probably not be enough to get things to that point of reconsideration, though. Google needs to evidence more concrete movement towards supporting ecommerce for major suppliers of premium content products if it is to parry this thrust by Microsoft any time soon. The competition is good for us content consumers if it all comes out as a fair fight, but it may require some changes to Google's schoolyard report card to make it an even affair.
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