Wednesday, February 27, 2008

Microsoft search is not for you

This is how Microsoft does business: if you have a site which has a Google search link or Google AdSense ads, your site is excluded from search results. Thanks to Sherry Gil for pointing it out here. Of course, that's monopoly abuse in its worst form. But it's also a bad business. If people know that MSN search doesn't give them all relevant results, they are less likely to use it. Advertisers are less likely to put ads on MSN search. Microsoft can buy Yahoo!, but they won't make any money from it either, because search results will lose it's relevance. Just for the fun of it, try to search for "muddling investor" on Google, MSN and Yahoo. You won't find this blog on MSN.
What does it mean for investing: don't buy MSFT. This company is set to spend every penny it earns from 3 profitable products (Windows, Office and SQL Server) and then some, trying to put Google out of business. Not sure they can hurt Google. But such spending doesn't look good from financial point of view. There are some indications that MSFT will borrow money to buy Yahoo! That's going into debt from current $20B cash hoard. Doesn't look good, Yahoo! will never make MSFT money.

Full disclosure: at the time of publication author had long position in Google and didn't have any positions, long or short, in Microsoft and Yahoo!. Positions can change at any time.

Disclaimer: This article is not intended as an investment advice. Every person should make her/his own investment decisions based on all available information and advice from her/his own financial advisor.

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