Within five years it’s going to be hard to run any kind of web service or application that is not open source, or at least provide a strong set of open API’s. This is part of the new paradigm of Internet business. Open Source has been around for years, but only now it is really starting to take hold. This is partly why Google has the strategic advantage over Microsoft as we move into the future. Open Source is built into the Google DNA. Microsoft has been built on the concept of proprietary systems and control. Buying Yahoo makes sense for Microsoft not just for their search advertising program, but for the Yahoo culture and philosophy. Yahoo also has Open Source built in. If Microsoft would allow some of that to seep in, it could benefit them emencly.

Partly Google is trying to trough as much cold water as they can on the deal. Having two weak competitors hanging around instead of one possibly larger and stronger one is better for Google.

Google says the merger is bad for innovation on the Internet and bad for users. Partly this is driven by the fact that Yahoo is a an open standards based company and Microsoft is not. It is a legitimate fear that Microsoft will take what good Yahoo has done and turn it into a proprietary mess. But Yahoos impact on the net is not very strong right now, so that loss wouldn’t do much. Most of the innovation lately is coming from all the web 2.0 companies popping up like daisies. We would all morn the loss or degradation of Flickr and Delicious though.

It’s unusual to see Google show any fear lately which makes me thing there might actually be something to a Microsoft Yahoo combination. I still think most of the Yahoo talent will leave and the whole thing will crumble apart. What is left of Yahoo will be overwhelmed by the Microsoft dominant culture.

So Sergey, rest easy, there is nothing to fear. And the Internet, it will survive. That’s what it does best. Adapt and change.

It is sad to see though, because Yahoo was one of the Internet pioneers, one of the first websites many of us old timers ever went to. It was simple and useful and fun. Now Yahoo is a convoluted, complex mess. If Microsoft can do anything worthwhile with Yahoo is an open question. They will also have to deal with massive culture clash and most likely a big brain drain. But Microsoft is desperate to compete better with Google and this could be their best shot. Competition is a good thing in this market as Google could become as fat and lazy as Microsoft has with too much dominance.

Note to Yahoo: when it’s checkmate, there are no options.