Why Google should heed the DoJ’s wake-up call

Image of FT Tech Hub

Listen to this article


Can Yahoo be serious? In its statement today on the collapse of its search alliance with Google, Yahoo said it was “disappointed that Google has elected to withdraw from the agreement rather than defend it in court.”

So let’s get this straight: Yahoo expects Google to go to war with the US government? And over a deal that meant very little at all to its bottom line?

Maybe it’s no surprise that Yahoo would want to fight to the end. It hasn’t got much to lose. But Google needs to wise up and be more careful about how it throws its weight around. Walking away from this alliance is the first sign that it understands what’s really at stake.

The arrangement always smacked of Google at its worst: a combination of naive insouciance and thinly-veiled scheming.

The insouciance was shown by Sergey Brin, who earlier this year blithely told a group of reporters (including this one) that the alliance was all about helping out old friends. After all, Yahoo’s Jerry Yang and David Filo had lent the Google founders a hand when they were just starting out, and anyway, their companies’ cultures were very similar.

The scheming was the obvious ulterior motive here, to block Microsoft. Asked about how they set corporate strategy, Google executives always deny they have such thoughts: everything they do is for the benefit of customers. But this partnership betrayed one of Google’s most powerful psychoses, its paranoia about Microsoft.

For the sake of its shareholders, Google really needs to move beyond this sort of badly handled, calculating manoeuvre.

In a blog note today, David Drummond, Google’s top lawyer, said that getting into a long legal battle would have been like “trying to drive down the road of innovation with the parking brake on.” True. But it was Google that let its eyes wander from the road in the first place.

The good news for Google and its shareholders is that it pulled out of this one before it was too late. The bad news is that the Department of Justice has been put on alert, and Google certainly can’t expect the benefit of the doubt next time around. It’s time to stamp on the accelerator and leave Yahoo in the rear-view mirror.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.