As Yahoo flirts with the idea of selling to the highest bidder, Google is faced with the problem of normalizing its position on the internet. It doesn’t want to be perceived as “too powerful”, while at the same it wants to maintain its market leader position by continuing to innovate at breakneck speed. That could be partly why Google is so complimentary toward Yahoo.

Google continues to struggle with how to capitalize on its purchase of YouTube, and while discussing that problem, chief executive Eric Schmidt mentioned that his company was outperformed in many areas by current rival Yahoo.

That sort of lip service speaks to a need for Google to continue positioning itself as a benevolent presence on the web, especially as its chief competitor slows down amid possible merger talks and takeover bids.

Looking at the graph below, there’s a significant gap between Live.com and the top two contenders. It’s a potential risk for Google if regulators decide there’s too much of a monopoly on the web.

That said, Google isn’t waiting around. It’s focused on deploying a new type of video advertising that differed from the current post and pre roll adverts on YouTube, according to TimesOnline.

Even so, Schmidt was quick to point out that, though Google may dominate in search advertising, Yahoo led display advertising by a fair margin.

Google’s goal was to change the world, Mr Schmidt said, adding that the company did not “start from monetisation”.

That’s a comforting sentiment, but one that’s tested on a daily basis as Google continues to expand its repertoire on the web.

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Entry was posted on Friday, June 13th, 2008 at 6:48 pm under Google, Internet, Yahoo!.

Read more entries by Matt Jansen.
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