The Web advertising world is rapidly consolidating to Google, Microsoft, and Yahoo — not just in search, but in the tools used to run large, automated campaigns. You'd think this would instigate a pricing war. It has, says MediaPost, but one that benefits the search giants, not their advertiser customers. As advertisers cobble together packages of ads to blanket the Web, using ad-placing tools from one company to manage bids on others, the three competitors could get a peek at each other's rate cards. As soon as Microsoft learns what Google is making off specific keywords, it could, in theory, raise its rates to match. Advertisers might protest the misuse of their private business data. But would they really even know it was happening — and if they did, what choice would they have but to switch to a competitor with similar practices?

Microsoft is buying Fast Search & Transfer, a Norwegian company, for $1.2 billion. Ostensibly, this is meant to bolster the search function within Microsoft's Office business. But I read it as an admission that Microsoft's multibillion-dollar annual R&D budget can't buy it a fighting chance against Google. Microsoft keeps spending more on "improving" its search technology, and yet consumers are indifferent; they continue to switch to Google in droves.

Wikipedia creator Jimmy Wales has opened the curtain on an early version of his for-profit search engine, Wikia. The quality of search results is low, say reviewers — very low. That's because Wales want you, the user, to build the search engine for him. That strategy may have worked with Wikipedia. But building the complex algorithms that power a search engine is not the kind of service I want performed by volunteers.

I'm as ready as anyone to declare Sony the victor in the epic high-definition disc battle. Its Blu-ray, now supported by Warner Bros., looks set to best Toshiba's HD-DVD. In Hollywood, where they still care about the industrial process of shipping plastic discs by the millions to retail stores, this matters. In the Valley, we've long since moved on. Sony executives still dream of formats, hardware, and an empire of lock-in. To them, "software" means the creative content screened in theaters, dropped into CD players, or played on a videogame console. That's why they're doomed to lose the real war.

From The Wall Street Journal: "Microsoft said that NBC Universal Inc., Walt Disney Co., Metro-Goldwyn-Mayer Studios Inc. and Showtime Networks Inc. have agreed to contribute entertainment content to the software maker's Xbox Live and MSN online services. The deals were slated to be announced during a speech by Microsoft Chairman Bill Gates on the opening night of the Consumer Electronics Show."

CNBC's Jim Cramer, host of Mad Money, dropped his predictions for 2008 in New York magazine this week. Along with some safe bets like "oil goes up" and "Goldman Sachs makes a lot of money," Cramer throws out some unlikely but not off-the-wall predictions about Verizon and Apple. But then when he gets to Google, he goes off the deep end.

Megan Wallent, the newly female executive at Microsoft who formerly went by the name "Michael," reports that her return to the office yesterday was mostly uneventful. The women's restrooms have pink tile, she discovered. (No "trannie restrooms" for her.) "Microsoft Pink," she says, as opposed to the usual Microsoft-logo blue one encounters so much on the Redmond campus. Telling her story to Valleywag and then starting her own blog helped, she believes: "I thought just about everyone who would interact with me knew. Surprising people with a cool new set of 38Cs — not a good idea."

On December 30 and 31, Mac OS X accounted for 8 percent of computers browsing websites monitored by Net Applications, up 6.8 percent from November. Windows Vista? 10.5 percent. [Computerworld]

The U.S. government's cap on how many educated immigrants can come and work for companies like Google, Microsoft and Dell continues to spur the economy. Just not ours. But business couldn't be better at the Chilkur Balaji temple on the outskirts of Hyderabad, India, reports the Wall Street Journal. That's where some 100,000 visitors a week flock to pray before Lord Balaji, known as the "Visa God."

The surprise in AOL discontinuing the Netscape browser isn't that the Netscape browser is gone. It's that it was still alive, and that anyone was still working on it. From the moment AOL bought Netscape in 1998 this was a foregone conclusion. AOL was interested in Netscape's Web traffic, not its browser; it continued using Microsoft's internet Explorer in its online service even after the acquisition. That it took AOL nine years to finally kill off the Netscape browser speaks to the Internet giant's fatal sluggishness. Not to mention its unresponsiveness to customers. Netscape has long been nothing but a memory. With its antiquated and buggy browser gone, it can now be a fond one.

Yahoo's hopes to compete with Google and Microsoft in search and online advertising may be a fantasy, but the Internet company is a market leader when it comes to fantasy. Fantasy sports, that is. For those of you who haven't joined the rotisserie leagues, the object is to rack up scores based on the individual stats of imaginary teams made of real players. Not only does Yahoo have a much larger share of fantasy traffic than traditional sports properties ESPN and CBS, but, according to Compete, its lead grew this year with the opening of the 2007 NFL season (football is by far the most popular fantasy sport).

Cartoonist Hugh Macleod's Blue Monster — the beast urging Microsofties to "change the world or go home" — will get its own bus for the Consumer Electronic Show in Las Vegas on January 5. The blue guy with the big teeth is more cute than frightening, but there's another reason to run for safety if you see this sucker turn the corner. Guess who's driving it? Hint: the answer is NSFH — not safe for highways.

For running illegal gambling ads from 1997 to 2007, Google, Microsoft and Yahoo will pay fines totaling $31.5 million. Microsoft, the worst offender, owes $21 million; Yahoo, $7.5 million; and Google, $3 million. Additionally, Microsoft agreed to run $9 million worth of antigambling public service announcements and Yahoo agreed to provide $4.5 million worth of online advertising. The house does not always win.

Federal Trade Commission regulators voted 4-1 to approve the Google-DoubleClick merger. According to the WSJ, the commission ruled that the deal is "unlikely to substantially lessen competition." Google announced the merger eight months ago, but antitrust and privacy concerns brought by Microsoft slowed the deal in Washington. In the end, Microsoft, with its $500 million Viacom deal as well as its $240 million investment in Facebook, likely convinced regulators that the online-advertising business is as competitive as Google always argued.

Paul Allen, the Microsoft cofounder and prolific investor, has joined the list of bidders for available wireless spectrum under the FCC's January auction. It's not clear why Allen is entering the auction alongside established telephone carriers and Google, but what else do you get a billionaire for Christmas when he already owns a few sports teams, a megayacht, a submarine, and a spaceship?

Microsoft will pay Viacom $500 million over five years to serve ads and distribute content for the media conglomerate, according to reports. What does that mean? Besides Microsoft-sold ads on MTV.com, expect to see Nickelodeon clips on MSN, Laguna Hills downloads on your Xbox 360 console, and so on. Viacom's old advertising service was DoubleClick. We're guessing that relationship turned sour when Google — which faces a $1 billion copyright infringement suit from Viacom — announced its intent to purchase DoubleClick for $3.1 billion. (Photo by AP/Mark Lennihan)

The New York Times spent an epic 3,800 words on a truth known to everyone in Silicon Valley: Google is competing with Microsoft in email and productivity apps. Steve Lohr got lots of time with Google CEO Eric Schmidt — but attributes his failure to get any good quotes from Schmidt to Schmidt's caginess. Here's a version that skips the useless talking points from Microsoft and Google and just gets down to the scant few numbers Lohr managed to assemble. Bottom line: Microsoft doesn't have much to worry about. Yet. Lohr doesn't note this stat: 73 percent of consumers surveyed by NPD have noever even heard of Google Apps.

Ask, Yahoo, Microsoft and others tried really hard this year to gain on search leader Google. They failed. AOL, Yahoo, and Microsoft all dropped in share. Ask gained 0.1 percent. Google? Up as much as 6 percent, depending on whom you ask. Google also had larger gains in terms of total search queries, up 37 percent. Those Stanford kids are onto something. [AdAge]

Gizmodo found this clip of 60 Minutes interviewing Microsoft chairman Bill Gates. Gates barely gets started explaining precisely how smart he is before a panhandler taps on the window of Dick's Drive-In Restaurant, the Seattle burger joint where Gates has just ordered a $1.70 "deluxe." Can Gates spare some change? Nah. $36 billion, maybe, but not some change.

Thank you for seeing me, doctor. Right here on the couch, turned away from you? I read that doctors do that to eliminate the burden of eye contact. Ha, or in case they don't like your face, good one. Actually I don't like my face much either. That's what I'm here about.