Leading article: Google needs a competitor – even if it is Microsoft

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The Independent Online

It is tempting, when looking at the battle between Google and Microsoft over the latter's proposed purchase of Yahoo!, to wish that there was some way that they could both lose. It is a little rich to hear Microsoft protesting the virtues of its capture of the second most important search engine on the grounds of competition. After all, this is a company that has been prosecuted by the US and European Union authorities for anti-competitive practices. Whatever else, Microsoft has proved formidable in protecting the interests of its shareholders – notably its founder and soon-to-retire chairman, Bill Gates – and has rarely seemed to put the interests of competition above those of shareholder value. It has used its muscle to make up for market failure.

In 1995 only a handful of Microsoft programmers were working on a web browser as the corporation failed to spot the potential of the new technology. When Mr Gates woke up and assigned the project his highest priority, the victim was Netscape, which had once enjoyed an 80 per cent market share. After being bought by AOL Time Warner for $4bn at the height of the dotcom boom, Netscape withered and is now effectively moribund. Microsoft's aggressive marketing techniques to push Microsoft Internet Explorer on to Microsoft Office users' screens in place of Netscape were certainly a contributory factor, as the courts agreed. Whether the current upstart, Mozilla Firefox suffers the same fate at the hands of the behemoth remains to be seen. In any case, Microsoft is a corporate hero to few, despite the philanthropic exertions of the Bill and Melinda Gates Foundation.

Not that we can be much more enthusiastic about Google's ambitions. Like Microsoft, it has fought its way to a dominant position in its field and vanquished rivals such as Yahoo! into virtual irrelevance (in both senses o f the phrase). So powerful is Google that it has become a generic – like Hoover or Biro for previous generations. It has been easily able to see off the challenge from MSN, Microsoft's home-grown rival, an unprecedented technical and commercial failure for Microsoft.

Indeed, such is the degree of blurring brought about by the World Wide Web that Google, rather than any other technology company, has emerged as Microsoft's most potent rival – and threat. Software that is arguably better than Microsoft's and can be distributed easily and cheaply via the internet is the single biggest threat to Microsoft's future, and much of the developing rivalry to Microsoft's products may well emanate from Google or its allies. So what is the Google case? That "the openness of the Internet is what made Google – and Yahoo! – possible. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the internet: openness and innovation".

Maybe so, but what is the best way to preserve those precious underlying principles in a business – the Web – now approaching maturity? One option would be to let Yahoo! soldier on. It is an amazing testament to the pace of modern economic change that a company as young as Yahoo! has already reached the terminal stage of its life cycle. Yet that is where it is: destined to shrivel, like Netscape, or, just possibly, to be reinvigorated by Microsoft, if only as a spoiler for Google.

Despite the questionable commercial motivations underlying Microsoft's move, some form of competitor to the ubiquitous Google might be a good thing for web users. Oddly, Microsoft's holding in Apple helped that once arch-rival survive and move into more promising businesses such as the iPod. Yahoo!'s future is a tricky question that may end up being resolved by lawyers. Just don't expect to find the answer by Googling it.