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Microsoft and Yahoo reach deal
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Microsoft and Yahoo announced today that they have reached a deal, which brings Microsoft’s 
search technology to Yahoo. Yahoo will use Microsoft’s new Bing search engine and will exit the search engine development business. Under the deal, Yahoo will sell ads for both companies.
Together, Microsoft and Yahoo will capture a bigger segment of the search advertising market, which is dominated today by Google. According to a Wall Street Journal article published today, Yahoo and Microsoft spent a large part of the day approaching large advertisers to promote the benefits of their deal.
The new arrangement creates a more formidable runner-up to Google’s advertising dominance, albeit still a much smaller player. In the US, Google holds a 65% market share, Yahoo 20% and Microsoft’s Bing approximately 8%. Yahoo and Bing together will only hold 28%, but they will now present a stronger advertising alternative to Google.
Microsoft launched several campaigns to buy Yahoo in the recent past, and was consistently rejected by Yahoo’s ex CEO and co-founder Jerry Yang. Yahoo’s current CEO, Carol Bartz, is reported to be happy about the new deal with Microsoft, although there was no upfront cash from Microsoft into Yahoo’s bank account.
The two companies will continue competing in other parts of their business while being search partners. And although some are suggesting that having two major players in the search market instead of three will hurt competition, the real future in searching is not in static searches. New engines with semantic capabilities offer a lot more promise for intelligent results without the endless scrolling. Bing has semantic capabilities while Google doesn’t (yet.) But there is still low usage of semantic search engines; most are still building their huge taxonomies. And Google is still synonymous to online searching.
Photo: AP/Mark Lennihan
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