The proposed $45-billion merger between Microsoft and Yahoo may really change the Internet landscape. Most of the articles that I have read talk about how the proposal is an admission by Microsoft that it did not effectively respond to Google. Others emphasized how the merger is necessary if Google is to have competition in the future. (A fascinating argument given the talk a few years ago about the pending Microsoft monopoly.)
I am fascinated by the potential impact on the email universe. About 46% of the more than 200 million Internet users in the United States have Web-based email accounts run by Yahoo, while 27% use Microsoft's Live Hotmail and 29% use Google's Gmail, according to analyst Karsten Weide of International Data Corp. (Dow Jones Marketwatch) These numbers hide a few things. For example, how many people have accounts on all three systems? (I do.) And, how many use the accounts on all three networks? (I don't.)
If these numbers are right, then we may have a duopoly -- Microsoft/Yahoo and Google. Two companies that can mine your email, learn about you, and guide you to their services. For example, yesterday I wanted to upload photos from a friend's wedding. Would I use my Yahoo! login to connect to Yahoo's Flickr service or my Gmail login to connect to Google's Picassaweb service?
"Email is the more promising area from the perspective of looking at antitrust issues," said Haim Mendelson, a professor at the Stanford Graduate School of Business who has studied the impact of electronic information in the business world. "It is not clear why having a dominant position in email hurts anybody." Yet "email is part of a bigger issue, which is identity."
Email is the gateway to the Internet. It remains the killer app. It remains the one application that everyone uses. It remains the one with the most confidential information.
So, what is the potential risk when more than 50% of email users have an account from one company? If that company has complete access to your mail for data mining and analysis? What will it know about you and your neighbors? Can it control your access to other services?
Perhaps the antitrust regulators will force one of the companies to spin off email. But, how to you remove the killer app? It may make sense for an airline to spin-off routes or for an oil company to sell some gas stations. But, how do you spin off email? Do you prevent email users of the spun off service from signing up with the new merged company?
I am looking forward to seeing how the merger progresses. Whatever happens, it will surely be interesting.
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