Bing and Yahoo Search to wed
After what seems like years of 'will they, won't they' speculation, Microsoft and Yahoo have announced an alliance that finally brings some meaningful competition to Google's doorstep.
06 August 2009
Microsoft has been trying to buy Yahoo for ages, and it's only the departure of Jerry Yang, co-founder of Yahoo, that's made this possible. The deal isn't quite as simple as 'Microsoft buys Yahoo' but the effect isn't far off being the same.
Under the agreement - which has still to be approved - Microsoft's Bing will power Yahoo's search. This instantly 'grows' Microsoft Bing's market share - although it's risky. Presumably people use Yahoo because they like it - if Bing's results are radically different, they may migrate. They may also use Yahoo because they simply don't like Microsoft, in which case they are not likely to hang around either. In any event, this isn't without precedent - after all, it's Google's search that powers AOL Search.
As a result, Yahoo will be making its search data available to Microsoft, substantially increasing the company's search intelligence - and enabling Microsoft to integrate that search data into Bing and how Bing works, making it a stronger product.
Although this makes things look very one way, it's Yahoo that will be handling premium advertising sales for both sites - though presumably not keeping all of the revenue. But the self-serve advertising (when you sign up yourself) will be handled by Microsoft.
Microsoft will be paying Yahoo 88% of the search revenue that comes from Yahoo's search results pages.
Most importantly, the deal will make Bing the number two search engine - and Microsoft is going to benefit from Yahoo's search expertise and search algorithms.
The deal has still got to pass regulatory agreement - which is expected to take a couple of years and will most likely be the centre of a lot of opposition. Microsoft is likely to claim that this will create greater competition in the field of search, but it is hard to see how effectively removing one company from the market improves competition.
Although the two companies are going to keep their non-search products and services separate, consumers are not likely to perceive things in this way - there could be a backlash if people feel that their 'independent choice' has been removed.
It won't make quite a few webmasters happy either. If they've spent ages tuning their websites to get good results in Google, then they may have to start again once the search results come from Bing.
But it does put Microsoft into a strong position. Bing isn't at all bad - in fact, it's pretty good. It's making inroads already into the search market, but taking a significant chunk of Google's business could take years. The deal with Yahoo could make things move a whole lot faster, and give Microsoft a real chance in the search arena.
Google has spent a decade becoming the 'portal to the world' and the number one source of Internet revenue. Microsoft's Live Search was never really a threat, and Bing or Yahoo alone weren't direct competition. But the Bing/Yahoo alliance is.
