Marketplace Scratch Pad

Yahoo and the giant pen

Scott Jagow Jul 29, 2009

When companies partner with each other, I generally find it difficult to stop my gag reflex. There are usually more buzzwords tossed around and more awkward camera moments than I can stand. Today’s Yahoo-Microsoft search and advertising agreement is no exception.

The two companies set up a website called choicevalueinnovation.com to explain how this deal will accelerate the pace and breadth of innovation by combining both companies’ complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising.

Seriously, I would prefer pig latin.

But this is a big deal, and apparently, it requires a big pen to make it official:

That’s Yahoo CEO Carol Bartz on the left and Microsoft CEO Steve Ballmer on the right. Their official comments:

“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,” said Yahoo! CEO Carol Bartz.

“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,” said Ballmer.

I got out my decoder ring and figured out that he’s talking about Google and she’s talking about money, money, money.

It really does sound like a smart move for both Yahoo and Microsoft. Microsoft’s search engine, Bing, should get a tremendous boost in taking over Yahoo’s search platform. And Yahoo gets to keep 88 % of the search ad revenue for five years. Yahoo will also save $275 million a year by not having to invest so much in its own search technology.

Still, as AP points out, the companies will have a tough time trying to get people to quit their Google habit:

Combined, Microsoft and Yahoo handle 28 percent of the Internet searches in the United States, well behind Google’s 65 percent, according to online measurement firm comScore Inc. Google is even more dominant in the rest of the world, with a global share of 67 percent compared to a combined 11 percent for Microsoft and Yahoo.

You can read more about the deal, in fairly plain English, here.

What do you think of it?

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