Microsoft-Yahoo deal may hurt competition, Google exec says

The head of Google’s search organization said the search deal announced Wednesday between Microsoft and Yahoo looked likely to be negative for competition and for consumers.

If Yahoo adopts Microsoft’s Bing search engine in place of its own, that will reduce the search market from three major players to two, said Marissa Mayer, Google’s vice president of search and user experience. She said several groups at Google were still studying the proposed partnership, which is expected to close next year, but that it might reduce innovation.

“Everyone runs faster in a race where there are more people,” Mayer said in a brief interview at the AlwaysOn Stanford Summit in Palo Alto, California.

The likely effects of the deal are being debated in various corners of the industry. Some observers have suggested it may increase competition in the online advertising market, by creating a more viable competitor to Google.

When it comes to search, however, an industry analyst shared Mayer’s concern.

It’s “unfortunate” that there will now be one fewer major search player because it will weaken the competitive landscape, IDC analyst Al Hilwa said.

In their quest to catch up with Google, both Yahoo and Microsoft were doing interesting and innovative things in search, he said. “That has been good for the industry,” Hilwa said. With this deal, Microsoft is likely to feel less urgency to innovate and “move the needle,” he said.

Mayer was at the AlwaysOn conference for a panel discussion about innovation, where she talked about how Google develops and cultivates ideas. The core of its approach is forming small groups that cover all key areas of expertise, she said.

When Mayer joined Google, the company only had nine engineers. When it grew to 18 engineers, it had to decide whether to put more people on the three projects it was already working on or create more three-person groups. It stuck with small groups and formed more of them, she said.

Google’s groups typically include a technical leader, a product manager, designers and a technical team to carry out the project, Mayer said. But they are largely self-selecting, often forming around ideas that have come out of the 20 percent of a Google employee’s time that’s devoted to personal side projects. Those are the kinds of projects that can inspire a team to work on weekends, she said.

Development teams typically work in the same office so they can just turn around to bounce ideas off each other, Mayer said. With user interface designers included, a team can come up with a new feature, immediately work out how it might look to consumers and test the design from the beginning, she added.

Brainstorming goes hand in hand with prototyping at Google, according to Mayer. For example, when the company’s Gmail development team comes up with a new component or design tweak, the members typically try it out themselves for a day before deciding whether to pursue it.

Mayer defended Google’s focus on statistics about how consumers use its products, an approach that has been criticized as “data-driven” and stifling creativity.

“To be data-driven means to be user-focused,” Mayer said. All design starts with intuition, but the constraints imposed by real-world use statistics can give rise to greater creativity, she said.

“Sometimes that data proves you wrong, and when it does, it can cause you to question yourself and what you thought was the right thing to do. How do you respond to that?” Mayer said.

Google doesn’t initially worry about whether a technology can be monetized through direct payments or advertising, but looks at whether it’s popular.

“Anything that attracts a lot of users, that’s fundamental to their everyday life routine, is monetizable,” Mayer said.

Juan Carlos Perez in Miami contributed to this report.

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