May 23, 2017

Why Didn't Google Buy MySpace?

All that follows is based on hearsay, but there are times in Web court when that’s all you’ve got. Rupert Murdoch says Google passed on an opportunity to purchase for half the price News Corp. paid. Some call it a blunder; Murdoch calls it arrogance. But MySpace may have tipped Google’s Evil Meter.

Why Didn't Google Buy MySpace?
Should Google’ve Bought MySpace?

Murdoch’s quip comes from Wired Magazine:

I like those guys, but there’s a bit of arrogance. They could have bought MySpace three months before we did for half the price. They thought, “It’s nothing special. We can do that.”

The only public interest Google has shown in the explosive social networking site has been recently when News Corp. said it was looking to major search engines to bid on a position within. It’s now competing with Microsoft to power MySpace search when it could have owned the site outright.

But also, as Robert Young thinks, there is the opportunity cost:

Had Google acquired MySpace, they would likely be ranked the #1 Internet property on all user & usage metrics nudging out Yahoo! from that top spot. It certainly would have been quite a sight to see being #1 overall, based on its dominance in search fortified with an even greater dominance in the social networking category. It certainly would have cemented Google’s leadership into a near-ineffable state of invincibility.

So why did Google pass on MySpace? Though Murdoch says it was arrogance, that seems oversimplified. Murdoch doesn’t mention in the Wired article the conversation he was reported to have had (hearsay remember) with Google CEO Eric Schmidt just before News Corp. bought Intermix, the parent company of MySpace.

Intermix founder Brad Greenspan says his company was sold on the cheap to News Corp. by eager shareholders looking jump ship before it went up in flames. The company was in the sites of New York Attorney General Eliot Spitzer for secretly installing spyware and adware onto millions of computers through affiliations with Kazaa and other programs.

Greenspan alleges insider trading among other allegations of banking scandals. He also says News Corp. worked in $150 million to the deal for indemnity against lawsuits. Intermix was a bit hot in the Spring of 2005 (when Spitzer slapped them with the lawsuit and the other allegations were flying), which may be why they were on sale for half-price.

The whole thing was a mess and who wants to spend $300 million on an apparent sinking ship, the crew of which could be facing jail time? Or maybe dealing with a company such as Intermix was inconsistent with Google’s (now unofficial) Do No Evil policy.

Then again, Greenspan did recount Schmidt’s advice to Murdoch in the lawsuit press release:

According to Michael Nutley of New Media Age Rupert Murdoch was told by Google Chairman Eric Schmidt that acquiring Intermix and MySpace would be “the best deal of his life.”

Maybe Schmidt lost in the Google boardroom. Maybe he was just egging Murdoch on, letting him spend half-a-billion dollars on a risky experiment. The world may never know why Google passed on MySpace, but we can see why they might’ve.

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