Microsoft-Yahoo Search Deal Tag

Microsoft and Yahoo Strike a Search Deal

In the last 48 hours the web has been buzzing with the news of a Microsoft-Yahoo search deal that could potentially change the landscape of search forever. Although not final and more importantly, not approved by the regulatory commission, the deal would essentially make Microsoft’s search technology, Bing, the engine that powers all Yahoo search. There are other stipulations to the deal and a lot of technical specifics, but both companies feel they benefited from the deal and are looking forward to implementing the change as early as the beginning part of 2010. Google, however, might have something to say about the deal, as this essentially removes a search competitor from the market and makes it a two-horse race in the very lucrative game of search.

Here’s the basics of the deal and some links to more information:

The main component of the agreement involves search technology. Both Microsoft and Yahoo currently have their own search technology, or engine, that powers both the organic or natural search results and the paid or sponsored listings. Google of course has these technolgies as well. The deal gives Microsoft exclusive rights to Yahoo’s technology and puts Microsoft’s Bing as the driving engine behind all Yahoo search results. You’ll still be able to search on Yahoo just like before, but all the results will say “Powered by Bing”. Microsoft gets this technology for at least 10 years and is paying Yahoo for it.

Yes, this means Yahoo is giving up on search. Their CEO, Carol Bartz, would like us to think that Yahoo will do better if it can concentrate on its online properties like mail, news, sports, etc. It’s expensive to run search and Yahoo is now going to lease it from Microsoft so they don’t have to. With this deal, they’ll be two main choices in engines. Google, who has about a 70% market share, and Bing, which will power Bing, and all Yahoo search properties, with about a 30% market share. Steve Ballmer, the CEO of Microsoft, is considered a genius for pulling off a deal that eliminates a search competitor at a very low cost.
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