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Microsoft-Yahoo search pact appears to be a win-win (if smaller) deal

By | July 28, 2009, 5:26pm PDT

Summary: Microsoft’s 18-month courtship of Yahoo has reportedly culminated in an ad and technology pact that appears to be smaller than many analysts anticipated, but still gives the software giant the 30 percent search market share it craves. Various reports have Microsoft and Yahoo announcing a deal within the next 24 hours. Kara Swisher notes: No upfront payment [...]

Microsoft’s 18-month courtship of Yahoo has reportedly culminated in an ad and technology pact that appears to be smaller than many analysts anticipated, but still gives the software giant the 30 percent search market share it craves.

Various reports have Microsoft and Yahoo announcing a deal within the next 24 hours. Kara Swisher notes:

  • No upfront payment for Yahoo;
  • Microsoft’s search technology will power Yahoo’s search;
  • It’s unclear whether the Bing brand will land at Yahoo;
  • Yahoo will still sell search ads on its site and Bing, but Microsoft’s AdCenter will be the technology powering those sales.

The deal does appear to be structured in a way that saves Yahoo money, allows it to participate in search advertising upside and grab search market share. Indeed, Ad Age reports that Yahoo will drive ad sales in the deal.

Yahoo CEO Carol Bartz noted that search needs scale and seemed to imply that a deal with Microsoft wouldn’t be so bad after all. Bartz, who even said she liked Bing, has also maintained that Yahoo wanted to control its customer data.

In the end, it appears both sides got what they wanted. Yahoo maintains sales control and the customer relationship. Microsoft’s gets search market share as well as a big win for its Adcenter platform.

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Topics

Yahoo Search, Yahoo! Inc., Microsoft Corp., Sales Strategy, Search, Sales, Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic.

Disclosure

Larry Dignan

Larry Dignan has nothing to disclose. He doesn’t hold investments in the technology companies he covers.

Biography

Larry Dignan

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CNET News.com. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism and the University of Delaware.

For daily updates, follow Larry on Twitter.

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RE: Microsoft-Yahoo search pact appears to be a win-win (if smaller) deal
homeioy4901-24353685151921060474470391678351 Updated - 6th Nov
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Unlike the last attempt at a deal.
CobraA1 28th Jul 2009
Unlike the last attempt at a deal, which was ONLY a win for shareholders and not a win for consumers.
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Has Ballmer been shoved away in a closet?
xuniL_z 28th Jul 2009
It sounds like a new Microsoft and one willing to make deals, make concessions and accept lesser roles where needed.

Now that is what we've been waiting for.


With Obama's pick for the head of the Anti Trust dept., Christine Varney being focused on Google from the start, with little interest in MS any longer, it seems the web playing field is going to become much more even.

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Why does Yahoo want to use M$ search engine?
LBiege 28th Jul 2009
It didn't generate more hit than Yahoo own ones.
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Could be a better technology
John Zern Updated - 28th Jul 2009
maybe like Google, they maintain the share they do not because they're all that much better (I read alot of people here complaining about Google's results) but instead on it's perception of it from the past:

Maybe Yahoo's looking to grow a larger share then the one they seem to have for the past few years, and their technology just isn't doing it.
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Yahoo Doesnt Want Microsoft, But ..
shakethebabyass2011 28th Jul 2009
I think Yahoo has something Microsoft wants (Higher share of search. If MS is going to attempt at becoming a succesful search engine.. Getting Yahoo users would give them a fighting chance. We all know yahoo is slowly failing behind, sharing with a major company such as microsoft will assure them a little better of a foundation so that they can work on staying a major competitor. I highly doubt Yahoo WANTS to do this.. they see no other options right now.

I hope this gives these to giants more exposure myself becuase MS and Yahoo both offer so much morethan Google. Google has turned into an everyday term that we use (google it!) so I think that gets them alot more people as well. Sounds silly but you know it does.

Of course this is MY OPINION =)
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RE: Microsoft-Yahoo search pact appears to be a win-win (if smaller) deal
p2011 29th Jul 2009
SaaS should be the next step for Microsoft.

Why? MS has been following a regular trend of ... falling behind and trying to catch up. While MS expands to search engine Yahoo... Google is becoming more progressive with SaaS. MS also tries with their version of Google Earth, but we all know that Google is well ahead with it's mapping portfolios. So for MS, they really should go straight for SaaS and beat Google with Office FREE Online before Google Docs makes Office a thing of the past --- By the way, students are the future right? What do you think will happen when current students graduate with having been exposed more on Google Docs because Office for Student license is way too expensive for students let alone for none-students?
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Win-win??????
Economister 29th Jul 2009
Yahoo share price is down over 11%. Investors clearly do not think so.
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RE: Microsoft-Yahoo search pact appears to be a win-win (if smaller) deal
homeioy4901-24353685151921060474470391678351 Updated - 6th Nov
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