The two technology titans are at markedly different points in their respective histories. Microsoft is desperate for a way to become more relevant on the Web, while Google is in a race against time to find its next homerun as the search advertising market matures. So who do these companies acquire to achieve these objectives? Here are two ideas:
Google Goes All AOL-Time Warner Style with CBS
Forget social networking, mobile, and space exploration. Google is a media company. They have been experimenting with extending their AdWords platform in print, radio, and television advertising, and made a number of acquisitions to further the cause. But the way to really make a splash in the enormous offline advertising market is to acquire someone with massive distribution, and that means one of the big old media companies.
Beyond its old media assets, let's not forget that CBS also owns Last.fm. That's a lot more valuable in Google's hands than it is in those of CBS, as it finally gives Google a viable competitor to iTunes, and they has the reach (via search) to promote the hell out of it.
Microsoft Tries to be the Web's OS with Amazon
No, being the Web's biggest retailer probably isn't too high on Microsoft's wish list. But the sunk costs of building distribution facilities and a massive global infrastructure are mostly behind Amazon. And the company knows this, and has taken that infrastructure – matched probably only by Google in scale – and started the process of transforming itself into a web services company for providing scalable computing to the masses. And they're off to a big start – in its most recent quarter, bandwidth used by Amazon Web Services customers exceeded that used by Amazon.com – one of the most trafficked destinations on the Internet.
If Microsoft were to buy Amazon, they would be in an excellent position to push the cloud computing concept even further ahead. In remaining the dominant desktop OS, Microsoft still in reality has the largest developer community – developers that are also thinking long and hard about how to move their applications off the desktop and into the cloud. There are also the tens of millions of small and medium sized businesses that are currently Microsoft customers that are without a web strategy - Amazon Web Services fits perfectly into serving this segment too.
Finally, let us not forget Google is already moving in this direction too with App Engine. Microsoft needs to make a play in this space – and Amazon is the quickest way to do so (in addition to adding a company that grew revenue from $10.7 to $14.8 billion last year)
Will Either of these Deals Actually Happen?