The fabled ad and search deal between Microsoft and Yahoo is reportedly close to happening again.
Kara Swisher at BoomTown reports that Microsoft and Yahoo almost have a search deal done. By now you know the details: Yahoo outsources search and keyword ads, gets a few billion dollars and Microsoft grabs market share to chase Google. Another wrinkle: Yahoo would take over display ads for Microsoft.
Top executives at Microsoft–including SVP of the Online Audience Business Group Yusuf Mehdi, search head Satya Nadella and top digital exec Qi Lu, as well as others–have all flown down to Silicon Valley from their Redmond, Wash., HQ today to iron out the remaining issues, which seem to have to do with the deployment of technology.
What got us to this point? Bing. Microsoft delivered a search engine that got buzz, showed some improvements and grabbed a little market share. In other words, Bing gave Yahoo some leverage even though it snagged just a little bit of market share. For Yahoo it's much better to do a search deal now than when Microsoft potentially grabs another 5 points of market share. And Bing would take share from Yahoo instead of Google.
Piper Jaffray analyst Gene Munster, however, said Wednesday in a research note that Bing's small share gains are unlikely to hurt Yahoo. He wrote:
We believe the data from the launch of Bing reiterates our belief that Microsoft needs Yahoo! to be meaningful in online advertising and particularly search. In terms of timing around a deal, while difficult to predict, we believe there is a 35% chance of the parties engaging in a search partnership by the end of the year.
Now the deal between Microsoft and Yahoo can unravel---it has before---but it looks pretty close (again). If the Microsoft-Yahoo deal is completed the software giant will wind up with 30 percent search share, enough to at least attempt to nibble away at Google's lead.