John Battelle, founder of Federated Media and a prominent Google Watcher who also happened to interview Eric Schmidt this week at Web2.0 expo, is reporting that Microsoft was not only interested in matching Google’s offer, but actually offered to pay more. According to Battelle:
This raises a very important question – why didn’t Microsoft match Google’s $3.1 billion offer. Smith would not comment on this, but I can report from very good sources that in fact the company did offer to match it, and was willing to pay even more to insure that Google did not corner the online ad market. But for whatever reasons, the private equity firm that owned the majority of DoubleClick’s shares decided to go with Google.
I had similar thoughts that DoubleClick actually makes more sense with Google, because one of its major clients AOL is a partner of Google, and going with Microsoft will be equivalent to losing a major client. Another reason that is being floated is the financial performance of the two companies during the last 5 years. Google’s stock has seen a continuous upward climb with Microsoft’s staying pretty much flat. Google has also recently announced a stunning fiscal quarter, whereas Microsoft is struggling to sell Windows Vista and even the OEM’s are now switching back to Windows XP.
All these reasons although quiet plausible, seem unlikely to me. Why? because the majority of the stocks of DoubleClick were owned by a private equity firm, and these firms usually want to maximize returns. We are not talking about some kids selling their startup, who would prefer working at Google just because it is cool and hip these days.
On a related note Microsoft has called upon the Federal Government to scrutinize the DoubleClick deal, because Microsoft thinks that this deal, if allowed to go through will transform Google into a Search Advertisement Monopoly. More on this later.
