The on-again-off-again relationship between Yahoo! and Microsoft has finally produced a 10-year agreement. The two companies are joining forces for a new Web search service targeted at both users and advertisers. Effectively, Microsoft will be taking over the actual search side of things, while Yahoo! handles all of the sales for search advertisers.
- Microsoft is absorbing Yahoo!s search technology, and using it to create a more powerful version of Bing
- Yahoo! will continue to own and operate it’s current branded services, but all of it’s searches will be powered by the new Bing
- Microsoft and Yahoo! will combine their search advertising inventory for the new service, and Yahoo! will completely take over global advertising sales for this
- Microsoft will share revenue with Yahoo! based on how much traffic comes from Yahoo! servers. It will also pay Yahoo! “traffic acquisition costs” for the first five years of the agreement
- This service should see full implementation within 24 months… of regulatory approval
From the release:
Yahoo! Chief Executive Officer Carol Bartz: “This agreement comes with boatloads of value for Yahoo!, our users, and the industry. And I believe it establishes the foundation for a new era of Internet innovation and development. Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences.”
Microsoft Chief Executive Officer Steve Ballmer: “Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company. Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there’s so much more that search could be. This agreement gives us the scale and resources to create the future of search.”
What we think?
As it so delightfully says in the official announcement, this deal will give advertisers an alternative to “one company that dominates more than 70 percent of all search”. The company is un-named, but then again you don’t need to name it. Google is the elephant in the room that Yahoo! and Microsoft are trying not the mention. The entire purpose of this deal is to try and draw at least some of the global search advertising revenue away from the Google monolith. Can it work? That remains to be seen. The combined searches of both Bing and Yahoo! only amount to 11% of the global total – which doesn’t really compare to Googles 68%. Ok, so this gives them a better position to fight from. When you’ve got a tenth of the market between you, it’s best not to squabble. But Google is so utterly dominant that it’s very name has come to mean “to search for something on the internet”. I’ll be interested to see what innovations Microsoft and Yahoo! unleash to properly challenge that.