Pierre Chappaz, former head of Yahoo Europe mentioned on his French blog (translation) that Google is interested in purchasing the European browser company Opera.
There's a logic to this: as search becomes conveniently embedded in the browser, Google's search advertising business becomes vulnerable to Microsoft's browser dominance. Until now that hasn't been a problem, since Microsoft has failed to exploit its position; but at some point Microsoft will get its act together. And, since Google has already partnered with Opera by sponsoring the browser's embedded search, Opera may be viewed as a logical acquisition candidate.
But is Opera really the right target for Google? Not really. Opera has tiny market share, and that matters because getting users to download a browser is tough, even for a company with Google's 'net reach. Also, Google has invested more effort in its partnership with Firefox, even paying for affliate marketing that leads to downloads of Firefox. So for now this is probably a false alarm.
GOOG stock take-away: Many people in the Internet industry think that Google faces significant risks as long as Microsoft dominantes the browser. And Google's own efforts to partner with browser provides suggests that Google shares this fear. So why don't investors in GOOG have the same concern?
YHOO stock take-away: The embedded-search-in-browser risk might be lower for YHOO, as Yahoo derives more of its traffic from content and applications like email. At the same time, search is Yahoo's most profitable business.
MSFT stock take-away: Browser speculation again raises that possibility that investors are underestimating Microsoft's potential in the search market.
- Gary Price: "Opera is a key browser in the mobile space... plus it takes it off the market and keeps it from another company... from acquiring what in my opinion is a wonderful and constantly improving tool."
- Om Malik: "Given how close Google is with the Firefox community, this one just doesn’t make sense."
- Google Rumours: "Many top programmers for FireFox have ties to Google, but the open source status of the project makes it tough for Google to get more involved."
- Inside Google: "I can’t see them buying it. There are too many Firefox developers working in influential positions at Google. It would mean a turf war."
- Mathew Ingram:"Why not just partner with or fund Opera if Google wants to do a deal — like for Larry Page’s Google smart-phone?"
- The full conference call transcript from Google's most recent earnings call.
- All Internet Stock Blog articles on Google.
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