Prince Klemens Von Metternich, foreign minister of the Austrian Empire during the Napoleonic era and its aftermath, would have no trouble recognizing Google. To him, the world’s most popular web-search engine would closely resemble the Napoleonic France that in his youth humiliated Austria and Europe’s other powers. Its rivals--Yahoo !, the largest of the traditional web gateways, eBay, the biggest online auction and trading site, and Microsoft, a software empire that owns MSN, a struggling web portal--would look a lot like Russia, Prussia, and Austria. Metternich responded by forging an alliance among those three monarchies to create a "balance of power" against France. Google’s enemies, he might say, ought now to do the same thing.
Google announced two new conquests on August 7th. It struck a deal with Viacom, an "old" media firm, under which it will syndicate video clips from Viacom brands such as MTV and Nickelodeon to other websites, and integrate advertisements into them. This makes Google the clear leader in the fledgling but promising market for web-video advertising. It also announced a deal with News Corporation, another media giant, under which it will provide all the search and text-advertising technology on News Corporation’s websites, including MySpace, an enormously popular social-networking site.
These are hard blows for Yahoo! and MSN, which had also been negotiating with News Corporation. Both firms have been losing market share in web search to Google over the past year--Google now has half the market. They have also fallen further behind in their advertising technologies and networks, so that both make less money than Google does from the same number of searches. Sara Rashtchy, an analyst at Piper Jaffray, a securities firm, estimates that for every advertising dollar that Google makes on a search query, Yahoo! makes only 60-70 cents. Last month Yahoo! said that a new advertising algorithm that it had designed to close the gap in profitability will be delayed, and its share price fell by 22% , its biggest-ever one-day drop.
MSN is further behind Google than Yahoo! in search, and its parent, Microsoft, faces an even more fundamental threat from the expansionist new power. Many of Google’s new ventures beyond web search enable users to do things free of charge through their web browsers that they now do using Microsoft software on their personal computers. Google offers a rudimentary but free online word processor and spreadsheet, for instance.
The smaller eBay, on the other hand, might in one sense claim Google as an ally. Google’s search results send a lot of traffic to eBay’s auction site, and eBay is one of the biggest advertisers on Google’s network. But the relationship is imbalanced. An influential recent study from Berkeley’s Haas School of Business estimated that about 12% of eBay’s revenues come indirectly from Google, whereas Google gets only 3% of its revenues from eBay. Worst of all for eBay, Google is starting to undercut its core business. Sellers are setting up their own websites and buying text advertisements from Google, and buyers are using its search rather than eBay to connect with sellers directly. As a result, "eBay would be wise to strike a deep partnership with Yahoo ! or Microsoft in order to regain a balance of power in the industry," said the study’s authors, Julien Decor and Steve Lee, sounding like diplomats at the Congress of Vienna in 1814.
Julien and Steve seem to suggest that（）
A. eBay should further cooperate with Google to survive
B. eBay should form an alliance with Yahoo! or Microsoft
C. Google is making smaller revenues than eBay
D. Google’s core business has already shrank by 3%
