Microsoft Doesn't Want Your App Startup

In an interview published this morning in the Financial Times, Microsoft CEO Steve Ballmer said he wouldn’t be looking to pick up any other Internet companies just because the Yahoo deal failed. One can only imagine how far shares of Facebook would have plummeted on that comment had the social networking site been publicly traded. Ditto for Slide and RockYou, both of whom recently raised money at lofty valuations.

“People don’t understand what they’re talking about,” Ballmer told the FT. “At the end of the day, this is about the ad platform. This is not about just any one of the applications.” And for Microsoft, according to the interview, the primary ad platform is search. That makes sense as search is a billion-dollar, proven business.

Application companies have some ad revenue, but right now they’re kind of like cable channels for the web, while an ad platform is the means to a business model that supports that cable channel. Microsoft wants to own the keys to the business model. So to prove their worth, it’s time for application developers to prove their business model.

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