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Microsoft Seeks Online Partner

Posted by iMark - 2005-12-25

Microsoft may be cooking up a major Internet partnership to rival Google's newly bolstered relationship with American Online, according to a blog posting by a Microsoft manager.

Blogging for Business
Ian McAllister, a program manager for Microsoft's MSN division, said in a posting Wednesday that he had a meeting with "some senior players at another Tier 1 Internet company" who expressed interest in helping Microsoft compete with Google.

The posting, the company, which McAllister declined to name, reportedly spoke with Microsoft about the possibility of finding new ways to team with the software giant to help advance its search and advertising business.

"At the end of the discussion one of the people I was meeting with threw out a blanket offer to brainstorm other ways in which our companies might work together," McAllister wrote in the entry. "He then stated that his company was willing to entertain ideas for working with Microsoft that would help our search and/or advertising business, with one of the goals being to prevent Google from dominating those spaces even more than they are now."

Essentially, the representative said the Internet company "would help Microsoft level the playing field with Google in search and advertising," the Microsoft manager said.

Guessing Games

The entries have set Microsoft-watchers to speculating the identity of the potential partner. Richard MacManus, a Microsoft watcher and independent Web analyst in Wellington, New Zealand, cited McAllister's comments earlier this week in his Tales from the Web 2.0 Frontier blog. MacManus suggests the company mentioned might be Yahoo, but neither Microsoft nor Yahoo has announced an expansion of their current partnership.

McAllister's post proves that the tables have turned for Microsoft in that Google, not the software company, is viewed by rivals as the top Web company, MacManus said in an e-mail interview.

"In the Internet space, Microsoft is no longer the company feared most by its competitors," MacManus said via e-mail. "Ten years ago it definitely was. Nowadays it's Google."

The Microsoft manager said he is "99 percent positive" that anyone reading his blog is a customer of the company with whom he spoke. This suggests the firm mulling a Microsoft partnership may be an ISP, not a Web portal and search provider such as Yahoo, said Joe Wilcox, senior analyst with Jupiter Research.

Comcast, which has seen its cable broadband Internet customers increase as AOL's subscribers diminished, is dominant in the Seattle area, where Microsoft is based, Wilcox noted. McAllister lives and posts from Seattle, according to information on the blog where the post appeared.

Some analysts believe that after losing the AOL deal to Google, Microsoft may seek partnerships with broadband ISPs such as Comcast or AT&T. Those providers have highly trafficked portals, good candidates for advertising-based search by Microsoft.

"Microsoft would certainly benefit if say a Comcast or some other broadband providers with popular portals chose MSN as the default search," Wilcox said. In fact, the portal aspect of AOL was the primary reason Microsoft courted a search partnership with the division of Time Warner, he added.

Google Buys In

On Tuesday, AOL and Google announced an expansion of their years-long technology and advertising partnership that ended offers from companies, including Microsoft, which was one of AOL's most fervent suitors. Losing the deal to rival Google was a major blow to the software giant, and it would be no surprise if the company struck a similar competitive deal in retaliation, analysts said.

Further, Microsoft has become far less dependent on some of the technologies for which the company traditionally has partnered with Yahoo, such as search-algorithm technology, as it has begun to develop its own, Wilcox added.

Microsoft's public relations firm Waggener Edstrom could not be reached for comment Thursday because the company is closed for the December holidays. A Microsoft spokesperson and Comcast representatives also could not be reached for comment. A Yahoo spokesperson said Thursday that the company does not comment on rumor and speculation.

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