Microsoft’s CEO: Fight continues / Ballmer says Google tough search foe but not unbeatable: San Francisco Chronicle, May 2006

Steve Ballmer, the excitable and often combative chief executive officer of Microsoft Corp., came to Silicon Valley in a somewhat conciliatory mood Thursday, tipping his hat to archrival Google Inc. for building a powerful lead in the Internet advertising business.

But in an interview at Microsoft’s Mountain View campus, and in a lunch talk at the Churchill Club in Santa Clara, Ballmer cautioned against counting out the Redmond software giant.

[BACK STORY – Microsoft CEO Steve Ballmer talks about battling Google in this podcast interview with Chronicle Business Editor Ken Howe and reporter Dan Fost. Also, Ballmer speaks to Churchill Club in Santa Clara.]

“Hats off to them. They built a nice position in search,” Ballmer said in the morning interview. “But it’s not like search is going to be an area without innovation in the next five years. … Fifty percent of searches don’t actually lead to somebody finding what they’re looking for. As long as that’s the case, there’s a lot of opportunity for innovation in search. And there’s a lot of opportunity in the advertising platform for innovation.”

He said Microsoft is the third-largest seller of Internet advertising “on the planet,” and its history shows that even when the company lags in an area, it will often battle until it prevails.

“We’ve shown many times in the past that we have the tenacity, the persistence, the patience to get after something and stay after it, and stay after it, and stay after it,” he said in his Churchill Club talk. “Our patience distinguishes us from many technology companies.”

He ticked off a list of companies that have fallen to the Microsoft juggernaut, eliciting gasps from the audience of 400 people when he named Netscape — whose fall was later found to have been caused by Microsoft abusing its monopoly power — and Novell, which was led by Eric Schmidt, now the CEO of Google.

Although Google co-founder Sergey Brin made headlines a day earlier with his pointed comments about Microsoft being a “convicted monopolist,” Ballmer chose not to take the bait. Instead, he offered some bait of his own, cautioning that Google’s dominant market share in Internet search could lead the Mountain View company to some antitrust problems of its own.

“If there’s only one advertising marketplace in the world, there’s going to be lots of unhappy people,” Ballmer said at one point in his Churchill Club talk. At another juncture, he said, “Everybody has been saying to me for years that everybody deserves good, healthy competition. We want to make sure we have good, healthy competition.”

At the Churchill Club, Ballmer fielded questions from Silicon Valley venture capitalist Roger McNamee, co-founder and managing director of Elevation Partners, who asked at one point, “Is there anything about Google that makes you think sometimes that they’re nuts?”

Ballmer smiled, paused, and said, “Yes.” But when pressed for specifics, he demurred. “It’s not my job,” he said.

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