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Tech companies buying media companies seems like a bad idea to me. It reminds me of Sony -- remember when they tried making MP3 players that didn't play real MP3s? That was because they owned Sony Music and were in the awkward position of trying to sell MP3 players and records at the same time. Because they didn't pick a side, they ended up losing both battles.

If Google bought a content company, they would be on both sides of the battle as well -- and if they really wanted to liberate the content, then they would have to explain to shareholders why they bought a company only to hurt its revenue.

You're right, Sony never could work the synergy between its deep vertical component companies much. It doesn't have to be that way, though. Problem with the current video entertainment situation, I think, is the difficulty to bring about that first separation from the pact, much like Apple did with the phone companies. But remember that, Verizon laughed at the level control that Apple wanted with iPhone idea, so Apple went to AT&T. OTOH, Time&Warner and Comcast are pretty much monopolies in their areas, so there's no big competitor that a company like Google can turn to to force their hand. On top of that content providers have seen what happened in the music industry so are very weary of giving control (though the music industry is not in such bad shape as people make it appear, e.g. see this article http://www.economist.com/node/17199460?story_id=17199460&...).

So the situation is a chicken and egg problem, someone has to break through. Apple TV and Google TV has shown that this will not happen as a halfhearted effort. Either Apple or Google should bet and bet big on TV and should not shy from spending a few billion, they've got the money.

I don't think that kind of self-defeat is a necessary result of having both teams playing for you. Look at Netflix: They used to be in the DVD rental business, then they went ahead and obsoleted their own business model and are more successful than ever for it. If streaming had failed, they would have still had their traditional role; but it succeeded, and now they're on the cutting edge of the industry. Likewise, a Google-owned media company could experiment with new models that others are too afraid to try.

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