Why Google isn’t laughing now

Google versus Microsoft

The current spat between Google and Microsoft, ostensibly over a Windows Phone app for YouTube, is symptomatic of a deeper rift that is likely to widen as time goes by.  In theory, the two giants are co-operating with each other, but it seems the market itself may be forcing them apart.

Google has declared this week ‘YouTube Comedy Week’ and on Sunday night our TV screens were full of expensive  adverts announcing  seven days of fun. Curiously, on the same evening our screen were also full of advertisements from Microsoft advertising the video download capability of X-Box.  Coincidence?  Perhaps.  But there is another explanation.

A week ago, Microsoft added Google Talk to Outlook and SkyDrive but then spoiled the co-operative gesture by saying it was allowing users ‘to chat with friends stuck on Gmail.’  Google’s chief executive, Larry Page, hit back saying Microsoft was ‘taking advantage of interoperating’ with Google, and calling Microsoft ‘really sad’, adding, ‘That’s not the way to make progress. You need to actually have interoperation, not just people milking off one company for their own benefit.’

Microsoft spokesman Frank Shaw retorted, ‘It’s ironic that Larry is lending his voice to the discussion of interoperability considering his company’s decision to file a cease and desist order to remove the YouTube app from Windows Phone, let alone the recent decision to make it more difficult for our customers to connect their Gmail accounts to their Windows experience.’

The issue was that Microsoft had provided an app that enabled users of Windows Phone to download YouTube videos.  But it made it possible for users to view YouTube videos without the ads. This made Google nervous.  So nervous, they got their lawyers to issue the ‘cease and desist’ order seeking to ban the Windows Phone app.

Revenues from search is dwindling.  Keyword search is likely to be superseded by other technologies. Revenue from YouTube ads is the future – perhaps the only future Google has.  The last thing Google wants is for apps to become widely available that deny them revenue – hence the lawyers.

At the same time that Google is trying to safeguard its YouTube revenue stream and establish itself as a devices maker with Android, Microsoft is trying to re-invent itself as a services provider and maker of Windows tablets.  This puts them pretty squarely on a collision course at many points, of which this is only the first.

One might almost say they all laughed when Google announced Comedy Week – but they’re not laughing now.

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