Home What's Brewing? Microsoft, Yahoo Change Search Landscape!

Microsoft, Yahoo Change Search Landscape!

A few choice words may say it best.Not “B-I-N-G” — “Because It’s Not Google” — but rather “And then there were two!”

“Make no mistake, Yahoo’s out of the search game,” confided search pundit and pioneer, Danny Sullivan. We “know the spin. Better user interface, new ways to innovate, a winning play. Let’s not kid ourselves. They’re done. Not today, not necessarily in a year, but down the line.”

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Yahoo was simply spellbound by Google. The Y! leadership couldn’t communicate clearly how it was a strong second place player. The Avis to Google’s Hertz, the Pepsi to their Coke. Yahoo seemed weak, ripe for the picking, and Microsoft went to pluck it last year. Google tried for Yahoo itself through a partnership deal. The US Department Of Justice said “No, no, no.” Do that, and we’ll take anti-trust action against you, Google.

This was not an impulse play, however. CEO Steve Ballmer noted on the conference call that the two sides have a 100-page playbook as opposed to a two-page term sheet and also noted that the negotiations were handled by management as opposed to representatives of the company’s boards. Microsoft did not give Yahoo any up-front payment.

Here are the major deal points:

– Microsoft’s Bing will now be the search engine on all Yahoo sites.

– Microsoft now controls a bit less than 1/3 of the search engine market.

– Yahoo’s search will remain branded by Yahoo.

– Yahoo will provide the relationship sales force for both companies’ premium search advertisers.

– Microsoft will compensate Yahoo through a revenue sharing agreement on traffic generated on Yahoo’s network. Yahoo will receive 88 percent of revenue from search ads on its site, for the first 5 years.

– The term of the agreement is 10 years.

While this is the fourth reincarnation of the Microsoft search engine, make no mistake: this is Microsoft’s best shot yet at beating its arch rival on its home turf. It’s never put so many resources towards that goal.

“And then there were two!” [24×7]

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