It's not always easy,
And sometimes life can be deceiving,
I'll tell you one thing, its always better when we're together
~Jack Johnson, Better Together.

AP is reporting this morning that Eric Schmidt, he being CEO of the great and almighty Google, thinks it would better if Yahoo! remained independent. Excuse me for a moment. I can't type I'm laughing so hard. Thanks. That's better. Nothing too self-serving there, is there?

Specifically, he stated:

"There is no question in our view that an independent Yahoo is better," Schmidt said. "It will provide more competition in search and other advertising markets, in particular in display advertising," he said.

Pardon me, Mr. Schmidt, but with all due respect, that's just nonsense by any measure. By some estimates, Google controls more than 75 percent of the internet text ad market. According to a February, 2008 comScore report, Yahoo! was the number 1 display ad player with 18.8 percent of the total market, followed closely by Fox Interactive at 16.3 percent. Microsoft was a distant third with a 6.7 percent share.

Now, I'm admittedly no math major, but if I'm Microsoft sitting back in third place with a 6.7 percent share and a pocket full of cash, and I see Yahoo! sitting pretty at the top of the heap, it doesn't take Ph.D. in mathematics to figure out if you take Microsoft's share and combine it with Yahoo!'s, you are going to have yourself a substantial lead over Fox and all it takes is $45B or so. Well, that's a no-brainer if you're Microsoft, right?

Of course, Mr. Schmidt is being more than a bit disingenuous when he has the gall to make a public statement like this. Of course, Google would prefer to see Yahoo! remain independent. Apart, Microsoft and Yahoo! provide only a modicum of competition, but together they could be a legitimate force, one that might not topple Google's overall internet dominance, but certainly one that could make Google a bit uncomfortable for a change.

I have preached about the value of competition in this space before. When it comes to the internet (or any business, really), it's never a healthy situation for the consumer (whether individual or particularly business) when one company completely dominates the industry, especially one as important as the internet. So while Microsoft and Yahoo! may continue to do their little dance, I think by summers end, they will make a deal. The numbers tell a clear story, they are better together, and whether Schmidt wants to admit it or not, it's the best situation for all concerned, except perhaps Google.

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