So, Microsoft (NASDAQ:MSFT) has bid over Google (NASDAQ:GOOG) for Facebook shares. I should be pleased, right? After all, I've ragged on Microsoft repeatedly for letting Google outbid it in the past, and here, finally, Microsoft went deep and won the deal.
If that's such good news, why do I feel so uneasy? Some might say that it's because I'm biased against Microsoft, that whatever Google does is good, and whatever Microsoft does is bad.
Hardly. I've beaten up on both companies many times in the past, albeit for different reasons. Google is far from infallible, as I've written here before. It makes poor acquisitions too.
But I'll be more specific. Google's engine empirically does a better job of monetizing content than does Microsoft's, which is well established. Assuming so, one would expect Google to be able to bid more, economically, for a pure content site (as opposed to an ad network like Doubleclick) than would Microsoft.
But it didn't. Why not? Obviously because it didn't see the same strategic value that Microsoft did on top of the economic value of additional ad-ready content at Facebook.
So, it really comes down to this: Do you believe that Microsoft knows its own strategic interests, and that it can act rationally and appropriately in their defense? Ten years ago I might have said yes, but today I have a much harder time. So when it comes to defending a large strategic premium over a credible competitor with a better basis for economic valuation, I have a hard time.