Truth in advertising; Microsoft.(Microsoft Corp. buys online advertising agency aQuantive)

Economist (US), The, May, 2007

Feeling unusually threatened, the software giant does an unusual deal

EVER since Bill Gates disrupted IBM's dominance of the computer industry and made Microsoft the world's biggest software company, he has feared being disrupted in turn. That is why in 2005 he hired Ray Ozzie, a veteran software guru. On arrival at Microsoft Mr Ozzie wrote a memo, called "the internet services disruption", in which he detailed the threat (Google), the trend (toward free web services) and its new revenue model (online advertising). By buying aQuantive, an online-advertising agency based in Seattle, Microsoft has begun to implement Mr Ozzie's anti-disruption strategy in earnest.

Last week's deal is nonetheless unusual for Microsoft. At $6 billion in cash, it is more...

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