Tech titans clash again

Is this what they mean by a circlejerk West Coast Style?

Redmond will continue to oppose Google’s $3.1 billion acquisition of Double Click, the online advertising company, despite spending twice as much money on its own move into digital marketing.

On Friday, Microsoft agreed to pay $6 billion in cash for Aquantive, a neighbouring Seattle company that owns three digital marketing specialists, including Avenue A Razorfish.

Chris Dobson, vice-president of global sales at Microsoft Online Services, said the combination of Google and Double Click would serve ads to 80% of all websites – raising competition concerns.

Microsoft was outbid for Double Click last month but has bought Aquantive for a price equal to more than 100 times last year’s profits and more than 13 times sales.

Dobson admitted that Microsoft was paying more for Aquantive than its business justified today. “The value that this company represents is beyond the strict [earnings] value today,” he said. “This is more about what capability it gives us in the market place and what that means in revenues and partnerships.”

Aquantive employs more than 2,000 people, mostly in America. Dobson said Microsoft would take care with the integration to ensure that it retained the firm’s talent. Brian McAndrews, Acquantive’s chief executive, will report directly to Kevin Johnson, president of Microsoft’s platforms and services division.

Analysts believe that ad-funded business models – such as Google – pose a threat to Microsoft’s traditional approach of charging for its software. Dobson said Microsoft was already experimenting with ad-funded versions of Office and Windows.

http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article1812719.ece