If Microsoft acquires Yahoo, the deal may leave the pair's joint venture partnerships with PBL and the Seven Network on shaky ground.
Yahoo7 and NineMSN are the only joint venture content partnerships that both Microsoft and Yahoo now have, and both stand on a knife edge as the tech giants decide their course of action following Microsoft's US$44.6 billion acquisition bid for its rival.
In Australia, the two largest Web display advertising outlets are NineMSN and Yahoo7, the number one and two respectively in the AU$260 million market.
However, the largest single sector of online advertising is search, accounting for 46 percent of the total Web advertising market -- a field which Google dominates and Microsoft hopes to intrude on with its potential acquisition. While Google's monthly audience for search advertising sits at nine million unique users, its closest competitor, NineMSN, attracts an audience of just 2.8 million. Yahoo7 meanwhile attracts around half that at 1.35 million users per month.
Any union between Yahoo and Microsoft would pose difficult questions for both Nine and Seven, with the two traditional rivals possibly being forced to share the same portal partner. Neither NineMSN or Yahoo7 would comment on the ramifications of the takeover bid.
Meanwhile, Yahoo's search business, which Microsoft would own if its bid succeeds, is already closely tied with NineMSN's business, according to search marketing experts.
"If you do a keyword search on NineMSN the sponsored results come from Yahoo's search marketing platform but the indexed or organic results are supplied by Microsoft's Web crawler," said Barry Smyth, director of search marketing company, Search Strategies.
And, according to Smyth, Yahoo's search marketing business operates independently from its joint venture with Network 7.
"Yahoo's search marketing is a wholly owned Yahoo division. Yahoo7 and Yahoo search marketing live in the same building, but they couldn't be further apart. They share office space but they have different CEOs, and basically different everyone," he said. As well as a search partnership, the two companies share an executive history. NineMSN's current CEO, Tony Faure, was Yahoo's first Australian employee. After leaving Yahoo he spent a number of years outside the Internet industry, but in 2006 returned to join NineMSN as its CEO -- the same year in which Yahoo struck its joint venture deal with Network Seven to create Yahoo7.
Microsoft's search efforts meanwhile have been increasingly targeted at taking on archrival Google. "Microsoft has spent a lot of time and money building their own paid search ad system called MSN adCenter. When you look at it from the perspective of the countries that it operates in, it's been designed in a way that allows you to go to one centre for any advertising -- from banners, Live Mail and in-game advertising for Xbox," said Smyth.
Despite these efforts, if Microsoft does acquire Yahoo, whether it would be better able to compete with Google on search is questionable.
Nielsen NetRatings statistics reveal that the combined total of Yahoo7 and NineMSN's search audience per month would still be less than half that of Google's. However Microsoft's Web presence would be boosted significantly in Australia: together, Yahoo7 and NineMSN's monthly unique audience sit at 13 million compared to Google's nine million, while Microsoft's Web-based e-mail user base would be quadruple that of the Gmail user base.
Although on the surface a Microsoft acquisition of Yahoo would appear to threaten the two TV networks, local content providers Nine and Seven are still likely to remain the more powerful partners in their respective joint ventures, since both sites depend on local content to attract audiences.