Microsoft and Yahoo Prepare to Battle Google

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Google: Security Mishaps and User Trust

Google’s momentum was echoed publicly by both Microsoft and Yahoo today. Steve Ballmer, CEO of Microsoft, stated that Google is making it difficult for them to recruit top talent. Also, in a move to likely earmark more dollars towards acquisitions, Microsoft increased their research and development budget for 2007 to $7.5 billion, which is $1.3 billion more than they stated in May. Update: Reuters just corrected its original report – $7.5 billion has in fact always been the 2007 allocation, the $6.2 billion number was last year’s R&D budget.

Yahoo made an acquisition and an investment today, which didn’t overshadow the fact that their quarterly profits took a 38% decline. They acknowledged that they face increased competition for online advertising dollars and thus announced plans to further invest in social media, Internet video and mobile access. Last month, Yahoo was reportedly in talks to acquire social networking website Facebook for $1 billion, but those talks went cold with speculation that Facebook is holding out for a higher offer.

Google’s recent YouTube acquisition is just the latest in a series of stings to both Microsoft and Yahoo, leaving many to wonder whether they can compete with Google in the future. Google is everyone’s darling right now — companies would rather be acquired by them (News Corp. sent a letter to YouTube seeking to start talks, but never received a response) and individuals would rather be hired by them (Google recently nabbed Yahoo India’s CTO).

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