Always one of the most active sectors, Internet acquisitions in all their shapes and flavors have continued unabated in 2008. Overall, we tracked hundreds of deals in this sector during over the course of the year, especially in the area of content sites. Yahoo!, Microsoft and the Google factor dominated the headlines, while the social contributions of the Internet kept our worlds connected in 2008.
Possibly the biggest M&A story of the year happened when Microsoft shocked the industry with its $44.6 billion offer to buy Yahoo!, a deal that never came about. Months after CEO Jerry Yang and Yahoo!'s board rejected the offer from Microsoft, and with Yahoo!'s stock sinking lower than it's been in years, the huge deal suddenly looked acceptable. Yahoo! CEO Jerry Yang was rebuked and Microsoft went on to acquire semantic search company Powerset instead. This drama was too big to die in 2008 and will continue in 2009 as Yang has volunteered to step down as CEO as soon as a new one is found to replace him. Maybe a new CEO will have better luck doing a deal with Microsoft or pulling off the much rumored deal to buy AOL.
Other search engines, like Hakia and Ask.com, continue to attack Google with a semantic approach that encourages users to make queries in complete sentences as they might in conversation, rather than the clipped, keyword approach Google users typically use. The Calais initiative, spearheaded by Thomson Reuters, is another so-called Semantic Web, or Web 3.0, approach to search that made progress in 2008. Many analysts express bullish opinions of Calais’ potential.
Google also continued its push into the enterprise, but there it's the upstart competitor rather than the dominating force. Though Microsoft has had its ups and downs in its Internet strategies, it is a well entrenched player in the enterprise. Microsoft solidified its position further in enterprise search when it paid $1.2 billion at the start of 2008 to buy FAST Search & Transfer, one of several leading enterprise search players like Autonomy, Exalead and others.
While Microsoft, Yahoo! and Google were dancing around each other all year, angling to grab, protect or even expand their share of the search market, social networking kept rising as the dominant force on the web in 2008. Facebook and MySpace helped define the social networking space, but in 2008 plenty of other firms helped push it to the mainstream. We can all agree that there are many reasons why Barak Obama won the U.S. presidential election, but most observers would agree that the Democratic Party's use of the Internet contributed to his triumph. Since becoming President-elect, Obama has initiated a weekly video address to the country, which is being distributed on YouTube. We can expect the rise in awareness of the potential benefits of the Internet as a social media to be broadly felt in 2009 and beyond.
It almost seemed like every Web company out there touted some "social" feature from wikis to chat to blogs and photo sharing. If anything's going to slow social network's growth, though, it is security concerns.
Just like blogging and the ability to comment on news items online are, in essence, popularizing and decentralizing the news industry, so too are virtual worlds popularizing and decentralizing the gaming, meeting, and 3D graphic design industries. Evidence supports the conclusion that the ‘killer application’ that is critical to virtual worlds, and, by extension, to Web 3.0 is, in fact, already here and it is none other than social networking. According to recent research by In-Stat, total registered users of virtual worlds are expected to exceed 1 billion and total revenue is expected to exceed $3 billion by 2012. If you don’t have some type of social network strategy, you should probably get one.