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Ballmer: YouTube Overvalued & Google Transferring Wealth From Content Owners

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The Web According to Ballmer from BusinessWeek has Microsoft CEO Steve Ballmer questioning the value of the Google-YouTube deal and oddly warning that Google is transferring wealth away from rights holders. It's an odd statement, since that's what Microsoft wants to do as well.

First the questioning of the YouTube value:

[You've got to ask] could Google do whatever it is they're hoping to buy without paying $1.6 billion? Is YouTube really some permanent, long-term thing, or is it a fashion?....Right now, there's no business model for YouTube that would justify $1.6 billion.

Though strangely, when BusinessWeek tries to pindown what seems a clear statement that Google overpaid, Ballmer says:

I'm not saying it is overvalued. I'm not trying to say that. It depends on a set of factors. I'm not saying I wouldn't write a check for that amount of money. I might.

And back to the controversial statement about Google's relations with content:

And what about the rights holders? At the end of the day, a lot of the content that's up there is owned by somebody else.

The truth is what Google is doing now is transferring the wealth out of the hands of rights holders into Google. So media companies around the world are all threatened by Google. Why? Because basically Google is telling you how much of your ad revenue you get to keep. They better get some competition. Us. Yahoo! (YHOO). Somebody better break through or you can short all media stocks right now. As long as there are two, you can hold onto media stocks. Google understands that. And that's one reason why they're willing to lose money up front.

Microsoft has its own video sharing service up, Soapbox. It has a question answering service, Q&A. It has an entire search engine that crawls the web like Google, Windows Live. Microsoft has plans for contextual placement of ads on pages, similar to AdSense. It's specific to MSN content now, but that will inevitably change. All of these things leverage the content of others in order to make money from Microsoft. So if these actions leverage wealth away from content owners, Microsoft is just as guilty of it as Google.

Frankly, all Ballmer seems to be saying is content owners would be better off if Microsoft was a strong third participant in ad game. Sure -- but let's not kid ourselves. Microsoft gets a lot better off by that as well, and it didn't jump into the game out of some desire to counter-balance the power of Google. It's in it to make as much money as it can, as well.


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