14 DAY TRIAL // Google is reading their users' emails on Gmail. This "factual statement" was delivered by none other than Microsoft Chief Executive Office Steve Ballmer, just the latest jab in the face-off between the Redmond and the Mountain View companies. In terms of email, the two giants are competing for audience with Gmail on one side and Windows Live Hotmail on the other, the result of melting Windows Live Mail and Hotmail together.
But when it comes to the online race, Google is the dominant presence on the search engine and Internet advertising interconnected markets, while Microsoft is lagging behind and struggling to catch up. Speaking at "The Online Opportunity" event at Microsoft's London office in Cardinal Place, Ballmer disputed that the advertising-based business model will become ubiquitous. And in this sense he offered the example of monetizing Windows Live Hotmail.
"We have seen the migration of things like email. Email in itself directly on Windows Live Hotmail doesn't generate that much ad revenue, so we've had to put a portal around it. Because the traffic it brings is very valuable, but it's not very easily monetized in the context of mail," Ballmer stated.
At this point Ballmer addressed the issue of user privacy. Microsoft has challenged Google in the past for the way the Mountain View Internet search giant understands to harvest user data in order to serve online advertising. User information that fully personalizes an online presence is critical to an infrastructure set up to deliver customized and targeted ads, tailor fitted on a specific user. However, Ballmer revealed that even though Google is aware of the context of emails, it still has trouble properly turning profit from Gmail.
"Google's had the same experience, even though they read your email and we don't. The theory was if somebody read your mail they'd know what to talk to you about. Well, it's not working as brilliantly as the concept was laid out. So you really have to ask the question, where are the sources of monetization, where do things make sense," Ballmer added.
Privacy is also one of the problems that Microsoft is using as leverage, along with the creation of a potential monopoly, in order to lobby the blocking of Google's acquisition of DoubleClick. Brad Smith, Senior Vice President, General Counsel and Corporate Secretary, Microsoft, in an appearance before the Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights, argued that user piracy and googling are concepts that simply do not mix.
"The phone company [isn't permitted] to listen to what you say and use that information to target ads. The computer industry doesn't permit a software company to record everything we type and use that information to target ads. Yet with this merger [DoubleClick], Google seeks to record nearly everything you see and do on the Internet and use that information to target ads. Indeed, one question is whether this merger will create a whole new meaning to the term "being Googled. These privacy issues in fact have antitrust consequences. Given the nature and economics of online advertising, this concentration of user information means that no other company will be able serve ads as profitably," Smith stated.