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The United States of Google

Stocks in this article: GOOG YHOO AOL T

Thus, like every other Internet company, Yahoo! can only seek to find niches within a Google-dominated world. After buying a number of small tech companies such as Tumblr, Yahoo! seems to have decided to return to the pre-Mayer strategy of media. This may be why TheStreet contributor Eric Jackson's Ironfire Capital of Toronto, which holds a stake in Yahoo!, is now buying AOL shares. It expects Yahoo! to gobble up the smaller Internet media company. 

AOL is also trying to compete with Google in the advertising space and it's finding similar problems. Google makes ad buying self-service, and delivers impressive analytics that let managers tweak campaigns in real time. Its software is better and its data on ads are deeper than any competitor can hope to offer.

Google's oft-quoted mantra, "Don't be evil," can no more stand against its own success than the United States' good intentions can stand against the world's skepticism.

The U.S. spends 41% of the world's military budget. Google's dominance over Internet infrastructure is becoming just as great. The company spent $2.29 billion on infrastructure in the third quarter of 2013 alone, almost twice what it spent in the first quarter.

AT&T's (T) widely hyped infrastructure spending plan, by contrast, is $14 billion spread over three years. Yes, Google is now bigger than the phone company.

Thus, you can think of Yahoo! as Canada, trying to compete with the United States. Think of AOL as Bolivia. They can't lead, they can't follow. The best they can do is get out of the way.

At the time of publication the author owned shares in GOOG and YHOO.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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