Who gets what in Microsoft-Yahoo deal

Bob Moon Jul 29, 2009

Who gets what in Microsoft-Yahoo deal

Bob Moon Jul 29, 2009


Kai Ryssdal: To take an old saying and update it for the search-engine wars. If you can’t beat ’em do a deal with somebody else — see if that works. That’s the approach the second and third place players in the Internet search business have decided on. Assuming today’s proposal gets the regulatory thumbs-up, everyday Yahooers won’t notice much of a difference. It’s what’s under the hood that’s going to change. If you search on Yahoo’s Web sites, it’ll be with Microsoft’s new Bing search engine. That’s their entry in the “beat Google at the search game sweepstakes.”

Today’s deal will give the Yahoo-Microsoft team control over roughly 30 percent of global-search traffic. Google, of course, has all the rest. Microsoft and Yahoo are hoping they’ll have a better chance now to grab a bigger slice of the Internet advertising pie, which is where that money part comes in. Here’s our senior business correspondent Bob Moon.

BOB MOON: The deal caps an on-again, off-again courtship that’s stretched over some two years. But today, Microsoft executives might well have been singing — or yodeling — their delight.

Matt Rosoff is an analyst with Directions on Microsoft, a research firm devoted to covering the software giant. He says Microsoft’s 10-year deal to become Yahoo’s search provider won’t threaten Google’s dominance. But advertisers will take Bing’s market share much more seriously.

MATT ROSOFF: When advertisers look at the search landscape and see a 70-30 split, it makes a lot more sense for them to split budget between two relatively big players.

Microsoft CEO Steve Ballmer predicted today that the company will be able use its data-sharing agreement with Yahoo to better target search — and advertising.

STEVE BALLMER: We’ll be able to find new features and improve the relevancy of search results more quickly than ever.

Yahoo will be able to cut costs by ditching its own search development. CEO Carol Bartz says that will allow her company to focus on providing content.

Ironically, Microsoft itself is a prime competitor in that arena, and both companies say they’ll continue to compete “vigorously” outside their search partnership. But Bartz all but concedes neither had much hope of competing in the search business without joining forces.

CAROL BARTZ: This agreement provides both Yahoo and Microsoft the scale necessary to compete against Google, which dominates more than 70 percent of all search.

Microsoft analyst Matt Rosoff.

ROSOFF: Microsoft can make sure that Google has to work a little bit harder, and doesn’t have as much time and as much money to pursue businesses that compete with Microsoft’s core business.

And that, Rosoff says, is exactly what Microsoft has been desperately searching for.

I’m Bob Moon for Marketplace.

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