Microsoft & Yahoo: Web 2.Over?

To different degrees, all three events-the Audible-Amazon.com friendly merger, Microsoft's apparently hostile bid for Yahoo, and Google's disappointing earnings result-can be pegged in part to broader economic trends. Investors (and executives) are worrying that the secular trend of rapid growth and rising profitability for Web 2.0 companies is running into the brick wall of the business cycle. Over the past year, the slowing consumer has dragged down a chain of sectors-from the homebuilders to department store retailers. Now it's the turn of technology companies. During Google's conference call, CEO Eric Schmidt said that "we have not yet seen any negative impact from the rumors of future recessions." He must not be looking in the right place.

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