Duopoly may take over Internet

Microsoft sign in Herndon, Va., and Yahoo sign in Sunnyvale, Calif.


KAI RYSSDAL: The folks who work in the P.R. department at Microsoft got up early this morning. They had a big press release to get out. The software company wants to buy Yahoo! for almost $45 billion.

It's not the first time CEO Steve Ballmer has proposed a get-together of the two high-tech giants. They were in talks last year. Yahoo said no thanks because it was in the middle of a turnaround plan. That didn't work out so well. Its stock has given up more than 40 percent since October. CEO Jerry Yang announced earlier this week he's laying off 1,000 people. Now he's got an offer he might not be able to refuse.

They won't say it outright, but both Yahoo! and Microsoft are scared to death of Google and what it's been able to do so far. Today's hostile bid could be the final step in the transition of the Internet. Marketplace's Lisa Napoli begins our coverage.

LISA NAPOLI: The proposed deal would create a duopoly in Internet search and advertising: In one corner, Google, which has 56 percent of the market. In the other, Yahoo and Microsoft, with a combined 30 percent.

Jeff Chester of the Center for Digital Democracy says this isn't how the Internet was supposed to be.

Jeff CHESTER: The Internet is supposed to have been a thriving marketplace of ideas, the most diverse and dynamic system of communications ever developed. But in a few short years what we've seen is that the same old powerful business forces that shaped the fate of old media -- newspapers and broadcasting -- is at work with so-called New Media.

Business forces, meaning money. Companies consolidating so they can grab a bigger chunk of an online advertising market that's multiplying faster than friend requests on Facebook. From $40 billion last year to an expected $80 billion by 2010.

Staci Kramer of PaidContent.org says when there's that much at stake, say goodbye to the quirky upstart the Internet used to be.

STACI KRAMER: You can say it's a mainstreaming of the Internet. What this does is it elevates it beyond nascent and into a major force.

And would make Google and Microsoft even more powerful than ever.

In Los Angeles, I'm Lisa Napoli for Marketplace.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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