by Steve Malone - Was anyone surprised when Yahoo! leaked the announcement last month that its Marketing Services Division, formerly known as Overture, was working on plans to provide graphical advertising slots? After all, only days before Google unveiled its own plans for extending the AdWords program to cover graphical treatments.

Yahoo! already has a track record in following up Google announcement of new product with its own versions. Throughout the past year year, whether it be desktop search, blogging services, personal search histories or picture sharing, Yahoo! has been matching Google pretty well announcement for announcement.

Of course, Yahoo! and the other search engines will tell you that they are merely responding to customer feedback and that any overlap in innovation is pure coincidence. However, I suggest that it is more like corporate paranoia and the mortal terror of being left behind.

Several years ago, I worked for the technology news site ZDNet. Our CEO at the time was one Dan Rosensweig, now the COO of Yahoo!

At that time, we were in a pitched battle with CNet for the hearts and minds of the online IT buying community. Each of us watched the other like a hawk. If we launched something, CNet would quickly follow suit. If something new appeared on the CNet site, we would move heaven and earth to get a competing product out as soon as we could.

At the time in the late 1990s, there was a huge business in tech advertising on the web. The feeling within ZDNet was that CNet may just have the inside track on something big. Something we had overlooked. CNet had already come out of nowhere and taken a market share which we thought was rightfully ours. We were determined not to let them get ahead again.

Does any of this sound familiar?

Eventually, in 2002, the two companies fell exhausted into each other’s arms and agreed a merger. A short time later Dan related to me an early conversation between the merged companies which went something like,

`Why did you launch this section?`

`Because we saw you had one...`

`But, we never made any money from ours.`

`No, neither did we...`

Suffice to say, much of the superfluous duplication and unprofitable ventures were culled in the early months and the merged entity never went on that kind expansion spree again.

Now, far be it from me to suggest that Dan Rosensweig, who is a smart man, has become a serial offender when it comes to paranoid me-tooism. It may be that the launch of new initiatives from Yahoo! that parallel those of Google are mere happenstance. It may even be that two companies in the same market will inevitably evolve product sets that are the mirror image of each other.

However, it’s my guess that whilst a flurry of new products and announcements might make for good PR and give the impression to Wall Street of a dynamic company, the effect on the bottom line is less than the sum of the parts.

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