Google's Hal Varian would likely have raised an eyebrow at a term paper submitted by Microsoft CEO Steve Ballmer on the search market.
Varian, currently on leave from the University of California at Berkeley to serve as Google's chief economist, thinks a lot of the arguments advanced by Microsoft in justifying its 10-year deal for Yahoo search are, in a word, "bogus." Microsoft has said that it needs "scale" to compete in the search market against Google, saying that larger amounts of traffic and data allow it to improve the quality of its search experience.
Q: One thing we've been talking about over the last two weeks is scale in search and search advertising. Is there a point at which it doesn't matter whether you have more market share in looking to make your product better? Hal Varian: Absolutely. We're very skeptical about the scale argument, as you might expect. There's a lot of aspects to this subject that are not very well understood.