Continental Drift

Follow me here:

Plate tectonics is based on the notion that the Earth is composed of seven or so large masses of crust floating atop layers of magma. Over time, the various points of tension between the land masses change due to the degree of volatility in the layers below, until at last the tension is released through a kind of awkward sputtering forward of the plates (better known as earthquakes). Then the process of gradual accumulation and release begins anew. We refer to this process politely as "continental drift" because, frankly, we don't know where or when or how it's going to happen next. In spite of all our knowledge and understanding, we're just drifting.

Now, by analogy:

The business world has its own version of "continental drift," specifically among large, multinational, public companies. To illustrate this, we could look at companies such as...hmm, let's say...Google, Microsoft, Yahoo and News Corp. The magma in this scenario is the volatility of market forces, and the tension is created by the need for these companies to not only "stay afloat" amid changing conditions, but also to deliver reliable, recurring profits to shareholders every quarter of every year into supposed perpetuity. Mergers and acquisitions tend to be one way that large public companies sustain this growth, often with unfortunate results. But every so often, the "continental drift" focuses into a highly acute tension that is intricate, fascinating and totally unpredictable. Consider our four case studies.

A tale of two futures:

The tech economy was rocked by Microsoft's announcement of an unsolicited (a.k.a. "hostile") bid to acquire Yahoo on February 1. As Google's shares fell, the company released this statement to argue (not unreasonably) that the Microsoft/Yahoo merger would raise "troubling questions" about the openness of internet search engines and the ability of users to make a choice. Rumors began to circulate that Google would make its own bid just to raise the stakes on Microsoft. Amid this tension, Yahoo watched its stock price appreciate dramatically, making the February 1 bid by Microsoft (which was locked into the end-of-day trading price on January 31) seem less and less attractive.

Enter News Corp. We now have a situation in which Yahoo's future could go either way, and each of the potential alternatives (though radically different) would make a lot of sense. On the one hand, a strong bid by News Corp may simply encourage Microsoft to make a more charitable offer to Yahoo in pushing the deal forward. Assuming that the regulators allowed the deal to pass, we would see the first real competitor to Google, and competition tends to spur innovation. On the other hand, it might make a lot of sense for Rupert Murdoch to merge his Myspace assets with Yahoo's search and infrastructure assets to form a truly dynamic information and content distribution portal. You can bet that something big is brewing beneath the surface. Behind the closed doors of boardrooms, there are numbers being crunched, scenarios gamed, meetings scheduled, announcements leaked to the press. These geysers serve as the prelude to a big finish.

So what does it all mean?

I know that I'm not qualified to know, and that's enough. But the bigger question is, Who cares? To me, this is the kind of drama that makes business fascinating. Ultimately, it will come down to a simple number, but that number will represent the dueling of ideologies about what the future of the internet will look like. So, as the WGA writers finally put down their picket signs and dust off their pencils, this real world drama is a safe alternative to reality TV. For my money, I'd take "continental drift" over Celebrity Apprentice anytime.