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Monday, July 24, 2006 - Page updated at 12:00 AM

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Brier Dudley

War of the Internet world

Seattle Times staff columnist

Many people have heard about the huge data centers that Microsoft and Yahoo! are building east of the mountains.

In the War on Google, those are the aircraft carriers. Less well known are the special-forces teams the erstwhile tech darlings have assembled for nimble, strategic attacks on their rival.

These teams are led by newcomers whom Microsoft and Yahoo! brought in to invigorate their organizations, lure hot talent and reclaim the buzz. Overall their mission is to accelerate the creation of Internet products that get their companies back in the running.

I spent time last week with both of these commanders: Gary Flake, director of Microsoft's Live Labs Internet research and product group, and Bradley Horowitz, Yahoo! vice president of product strategy.

They have similar roles but radically different styles that reflect the personalities of their companies. Neither would say whether their companies are forming some sort of anti-Google alliance.

The strongest link is Flake, who led Yahoo! research until last summer. Earlier he was at Overture, an online ad pioneer that failed to stay ahead of Google.

Flake doesn't want that to happen again. Live Labs is trying new product-development approaches that mesh the work of engineers with scientists in Microsoft's research group. Its team of about 40 engages on projects around the company and incubates projects of its own.

"Our target is nothing less than to build the greatest Internet technology in the world," Flake said.

Live Labs also helps fill a role that has been played by Bill Gates, research boss Rick Rashid and strategists like Craig Mundie and Ray Ozzie. Flake said Microsoft's too big now for one or even a few individuals to keep track of it all.

"We have historically relied on some really brilliant people to ... look at the forest and occasionally dive down and look at the trees and how the trees related to one another," Flake said. "While Live Labs isn't quite the institutionalization of that function, it's more of an acknowledgment that that's a really important thing to do."

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Horowitz was hired by Yahoo! two years ago to work on multimedia search, then he moved to the product-strategy job last year.

Yahoo! is less than half as old as Microsoft and has 10,000 employees to Microsoft's 70,000. But after Google took its Internet crown, Yahoo! realized it, too, had product-development challenges.

Horowitz finds and nurtures promising ideas. "We're the grease of innovation — we're a catalyst and a lubricant," he said.

One approach is "Hack Yahoo!," a program that has all employees spend a day building whatever they choose. They pitch their ideas on stage, and executives give tongue-in-cheek awards like "Least Likely to Ever Get Past HR" or "Most Likely to Keep the Lights On and Pay the Bills."

Hack Yahoo! is "a means of finding the cream within and allowing the good stuff to get the attention and the mindshare," Horowitz said.

Last week's earnings reports made it clear both companies have a ways to go. Yahoo! said its new ad platform is delayed, and Microsoft said its version won't be profitable until 2008. Meanwhile, the pressure's on Flake and Horowitz.

"We've got a pretty strong hand now," Horowitz said. "Now we've got to rearrange the cards and play that hand in a lot of ways, but the hand itself, I'm pretty proud of what we were able to do."

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com

Copyright © 2006 The Seattle Times Company

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