Pot. Kettle. Black. That's a snarkified distillation of hypocrisy that I lifted from one of my waggish colleagues, and today it applies brilliantly to Google (NASDAQ:GOOG).
This morning, a New York Timesstory details Big Goo's new efforts to try to hit Microsoft (NASDAQ:MSFT) with the ol' political hammer, by squealing to U.S. and European officials about an alleged anticompetitive threat. At issue is the new version of Internet Explorer, which Google maintains is unfair because it uses a Microsoft web search as the default option.
This would probably surprise anyone who's used the browser. In fact, Microsoft adopts a feature long available in alternative browsers, one that makes it dead simple for users to keep a variety of their favorite search engines close at hand. The result is one-click access to searches from competitors such as Google, Yahoo! (NASDAQ:YHOO), IAC/InterActiveCorp's (NASDAQ:IACI) Ask.com, Wikipedia, and even retailers like Amazon.com (NASDAQ:AMZN) and Overstock.com (NASDAQ:OSTK). It's just as simple to make a non-Microsoft engine the default, although the article notes that Google believes the 4-click process is too difficult for users.
Browser wars: a new hope
If that sounds as silly to you as it does to me, how about the hypocrisy of Google's promotion of its pet browser, Firefox? Last week, Google took the drastic step of advertising the alternate browser right on its hallowed front page. When I ran my copy of Firefox for the first time, the default page provided a Google search, and Firefox also features a little upper-right-hand search bar with options for alternate search providers. The default search, of course, was Big Goo's.
Pot. Kettle. Black.
Let's review a few facts. The Microsoft threat isn't even on the streets yet. It's still in beta. Moreover, the company crying for Uncle Sam to help it out isn't some tiny upstart fighting the big bad wolf. It's a multibillion-dollar enterprise that is far and away the leader in Internet search, with close to a 50% share to Mr. Softy's puny 10%. Big Goo's success -- and it's Microsoft-ish habit of horning in on other firms' moneymaking rackets -- seem to have morphed it from "don't be evil" media darlings into the new Silicon Valley monster boy, starting rumors that the mighty are looking to band together to fend off the threat.
Why so scared?
That gets me to the core issue for investors. Let's be frank, shall we? Google's attempt to play the populist outsider is wearing pretty thin. Google doesn't care about ensuring user choice. (The behavior of its own products makes that perfectly clear.) Google cares about ensuring that computer users keep choosing Google. Gone are the days when its Web search was superior to everything out there. Now it's all about the brand, and the trouble with Internet search brands has always been that they provide shallow moats at best.
It looks to me like Google isn't so convinced that its moat can keep out the barbarians. Let's review the tape:
- A billion bucks in protection money for Time Warner's (NYSE:TWX) AOL.
- The accidental release of slower-than-expected growth numbers, followed by hastily arranged "You ain't seen nothin'" analyst meetings.
- Billions of bucks' worth of follow-on shares sold in order to raise money for growth acquisitions.
- The "don't be evil" crowd doing censorship-affirming deals with the Chinese.
- And now (MS Antitrust II, anyone?) the normally tight-lipped search company is not only talking to the Feds, but talking about talking to the Feds to TheNew York Times.
Foolish bottom line
Google's still got some superior products, and I've no doubt that Google's got a bright future. However, companies' bright futures have a bad habit of doing little (or worse) for investors when those investors ignore little things like reality and pay whatever the bubbly market asks for those shares. With Google management looking increasingly desperate to fend off Microsoft's Internet not-exactly-a-threat, investors thinking of ponying up $420 a share might consider taking a look at all that writing on the wall.
Microsoft is a Motley Fool Inside Value recommendation. A free trial will run you through the math and let you decide if you agree.
At the time of publication, Seth Jayson had shares of Microsoft, not because he thinks Mr. Softy is the greatest coder around -- he doesn't -- but because he knows there's such a thing as cheap. He had no position in any other company mentioned. View his stock holdings and Fool profile here. Time Warner and Amazon are Motley Fool Stock Advisor recommendations. Fool rules are here.
