As a side note, and to pg's point, Microsoft did make some very smart Web 2.0 acquisitions from Silicon Valley in the years since --most notably LinkedIn and Github--, and let them run relatively independently.
> So if they wanted to be a contender again, this is how they could do it:
Buy all the good "Web 2.0" startups. They could get substantially all of them for less than they'd have to pay for Facebook.
>Put them all in a building in Silicon Valley, surrounded by lead shielding to protect them from any contact with Redmond.
There is indeed a large gap in the market between outsourcing all your infrastructure to Hyperscalers vs. hosting it on DIY-bare-metal and/or VPC providers. An open source alternative to AWS would do much to fill that gap, and we are building just that at Ubicloud (I'm one of the co-founders).
So far with Ubicloud, you get virtual machines, load balancers, private networking, managed PostgreSQL, all with encryption at rest and in-transit. The Ubicloud managed service uses Hetzner bare metal as one of its hosting providers, which cuts costs 2x - 10x compared to AWS/Azure. Would love to hear any feedback if you'd like to give it a try, or go through the repo here: https://github.com/ubicloud/ubicloud
> So if they wanted to be a contender again, this is how they could do it: Buy all the good "Web 2.0" startups. They could get substantially all of them for less than they'd have to pay for Facebook.
>Put them all in a building in Silicon Valley, surrounded by lead shielding to protect them from any contact with Redmond.