Google scored a big win over Microsoft and Yahoo by tying up with MySpace (acquired by News Corp 9 months back). Google will be the exclusive provider of text-based advertising and keyword targeted ads (AdSense) as well as web & site specific search on MySpace.com starting 4th quarter of 2006. Google is paying $900 M for the same. But look at the returns it can expect. MySpace displays more pages each month than any other Web site except Yahoo. It has user base of 100 M and with targetted 2007 revenues of $500 M, this is going to be big. MSN apparently was the other bidder and lost out.
What does this mean for Microsoft? This is the second big loss for MS when they have competed against Google, first being the AOL deal loss. Loss of entry into the biggest Social Networking site and seeing Google control others like Orkut makes that even more painful. So what does MS do? Time to Strut up the Live Search and make it more visible while keeping it simple to use. And where is AdCenter?
Then, today I am reading that Bebo (which became the largest Social Networking site in UK today surpassing MySpace) is looking to be acquired and possibly in talks with Viacom for the same. There is an opportunity here, Can't Microsoft just buy out Bebo?
Related: News Corp, Google Deal Deconstructed
Update: Since I blogged this, Microsoft has signed a deal to provide banner ads and sponsored links to Facebook (No.2 Social Networking site with 9 Million users).