Web's Big 3 Jockey for First

By Leslie Walker
Thursday, February 2, 2006

If the business race for Internet supremacy were a horse race, here's how I'd handicap it today:

Google is way out in front, with hints of tiring. Yahoo is a distant second, but gaining. Microsoft is the only other runner still on the track -- several lengths behind, no less -- but the aging champion won't quit.

Microsoft appears poised for a major sprint this year as it beefs up online or "live" versions of its software through new services called Windows Live and Office Live.

Other Web thoroughbreds are still running their hearts out, but they're so far back in the premium stakes race that you might as well put them on a different track.

Most interesting is how the potential champions are moving onto new turf at breakneck speed, obvious by the feverish pace of their buying over the past year.

Popular takeover targets included providers of Internet phone service, mobile data and digital advertising technology. It doesn't take much imagination to look at what those Internet stallions are buying and see them girding for runs against traditional phone companies, wireless carriers and established media giants.

Just last month, Google said it would pony up potentially more than $1 billion for local radio advertising firm dMarc Broadcasting and an undisclosed amount for Reqwireless Inc., a wireless software firm.

Yahoo announced last month it had bought itsy-bitsy start-up WebJay, which lets people share music playlists. In December, it gobbled up the online bookmark-sharing service Del.icio.us. And Yahoo bought several other content-sharing Web services last year, including Upcoming.org, an events service; and Flickr, a photo-sharing site.

Though Microsoft hasn't made notable Internet acquisitions this year, two weeks ago it announced that it bought software and other assets from project-management specialist UMT. And Microsoft snapped up two Internet phone companies last year: Teleo Inc. and Media-streams.com.

In most cases, the Internet giants are acquiring software and other technologies to jump-start new product lines.

Teleo, for example, developed software that lets people make voice calls to land lines or cell phones by clicking on phone numbers on a Web page. Teleo also had been working on a service to initiate voice calls from within Microsoft Outlook and Internet Explorer. Microsoft said Teleo would help it bring a new Internet calling service to market in partnership with MCI (now Verizon Communications) this year. Announced in December, the service will let people call regular phones through Microsoft's Windows Live messenger software.

Microsoft's other Internet-calling target was Media-streams.com, a Swiss firm that makes communication software which the Redmond software giant also plans to incorporate into its Internet phone products.

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