What’s $3.1 billion between friends? Or, put differently, what’s it worth to fix your display-advertising problem, corner the market for the “advertising operating system,” and deliver a hammer-blow to an already prostrate Seattle-based competitor? $3.1 billion? Sure. Only a few quarters of free cash flow.
So now Google controls a vast share of the market for graphical online advertising, too. And has yet another display on its world-domination dashboard about who’s doing what where. For those with an eye on the really long term, it’s hard to see how this isn’t good news.
For those with an eye on the near-term stock price, meanwhile, it’s probably bad news: Lower margins, a big management challenge, a significant price tag, an admission on the largest scale to date that it sometimes makes sense to buy instead of build (no shame in that–just lower returns on capital), and so on. But as Google made abundantly clear in its IPO prospectus, management (sensibly) isn’t focused on the short term.