Microsoft and Yahoo just announced that they will unite forces to face the giant of search engines, Google.
A successful completion of the talks marked the end of a year and a half of meetings, talks, gossips, influence and behind-the-scene calls. It all began with an unsolicited full takeover bid proposed by MS that rocked the internet world. From the summer of 2008 on, the software giant changed its approach and started pushing for a looser alliance - a combination of the search technology and search advertising systems of the two companies - to have better chance to catch up with Google.
According to Richard Waters and Joseph Menn from ft.com "The talks picked up steam late last week after the two sides reached the outlines of a deal in which Yahoo would not receive any upfront payment, as Microsoft had initially offered in the middle of last year, but the two sides would divide future search advertising revenues."
Yahoo would increase its cashflow at a time of declining revenue in its search business, for one. The other aspect: BING showed some major improvement compared to old MS search products, and this alliance would not damage Yahoo's image in setting up partnership with an inferior product than his own.
It is known that both Yahoo and Microsoft have failed to dent Google’s lead in the global search market in the past years.
Comscore, the online measurement group, said that Google increased its share of global web searches from 60 per cent last August to 69 per cent in May 2009, while Yahoo’s share fell from 11 per cent to 9 per cent in the same period. Microsoft, which launched Bing in June, has remained stable at around 3 per cent this year, lagging China’s Baidu with 9 per cent share of queries in May.
Even a combination of Microsoft and Yahoo’s search businesses would fail to overtake Google. According to Nielsen, the audience research group, Bing had 41m unique users in the US in June, compared with Yahoo’s 67m and Google’s 136m. But those are raw figures, A+B result that have little foreseeing basis for future developments of the all-new alliance, that you can read the terms at Microsoft-Yahoo press release.
As things take another dimension and speed in the internet, who knows where they will be in ten years' time, when the contract of exploitation by MS is due?
History will tell!
Sources: MS, Yahoo, financial times, comscore, choice value innovation