Google Turns Evil

The IHT reports that Google has purchased DoubleClick, quite possibly the most evil company in the history of the Internet (yes, it's worse than Microsoft). Google won what was apparently a bidding war with Microsoft over leverage in the Internet advertising business.
Google spent $3.1 billion in cold, hard cash for DoubleClick, significantly more than the $1.65 billion it spent on Youtube.

DoubleClick is a very valuable company to anyone who wants to know what you've been doing on the Internet. Advertisers are obviously interested, but so are privacy activists. DoubleClick is probably responsible for 1/2 of the spyware currently on the Internet. Basically, the company's business model is built around tracking what users do on the Internet, largely without their knowledge.

Most realists recognized that Google couldn't remain forever the perfect company, able to mix phenomenal products with high margins and social goodness. But this acquisition, literally beating Microsoft at its own game, just signals the extent to which Google has changed. One of the great criticisms of Microsoft is that it doesn't develop anything in house, but rather acquires smaller, more innovative companies and milks their products for revenue. Google is at least still paying lip service to its core competency by concentrating on advertising, but the writing is on the wall.

An intriguing side note is that private equity has infiltrated another giant deal. The connection this time is a San Francisco private equity firm Hellman & Friedman, which bought DoubleClick for $1.1 billion in 2005. Not a bad return for such a short investment. Watch for other private equity firms to develop companies with the express purpose of selling them to Google for a big profit. As long as Google retains control over the Internet through its search dominance, Google will have lots of cash from advertising to invest in other businesses.

Ironically, in much the same way that Microsoft used its dominance on the desktop to crush Netscape, Google is poised to use its search dominance to muscle into other areas.