Microsoft, Yahoo!, Google. What's in it for each?

Sep 17, 2009 by Doina


Previous days have found the web filled with rumors, either reliable or not so truthful, about Microsoft finally having closed a partnership deal with Yahoo. Although everything has been confirmed by officials from both parties, the mystery still remains as everybody is now wondering just who got what in this deal and what's Google going to do in response to this partnership closed by the next two leaders in the search engine industry.

If the combined share market in US for MS and Yahoo should be around 28%, according to ComScore, they still have a long way to go until they manage to take a serious bite out of Google's 65%. Nevertheless, the fact that Yahoo practically outsourced all its search business to Microsoft, means that it left to the latter party all the benefits of close insights into search trends and user queries and ultimate preferences. Although Yahoo is actually still going to sell the ads that will appear in both Yahoo and Bing search results, in the end it won't matter who is selling the ads, but who has the technology to compete. And this is were MS comes in.

If Yahoo!'s newly appointed CEO Carol Bartz states that she “is essentially giving up on search”, while maintaining a steady 88% of the revenue on ads that appear on Yahoo sites via Bing for the first five years, Microsoft will ultimately win on the long term, since the history of users' online search and buying habits will reside on MS servers, thereby improving their ability to come up with the most relevant results and, of course, ads. Only a new manager, untied to traditional ideas, could have give up what was once the fame and glory of Yahoo!. But in the end business is business, and Bartz did something no other CEO before her was able to achieve.

So Microsoft will have the underlying search technology and an improved market share of almost a third of the total market. That's something to brag about, but so are the expected financial loses for the next few years towards Yahoo!. By adding the almost 20%  market share from Yahoo!, Bing strengthens its place as the only search engine provider, other than Google, with a size that really matters.

Meanwhile, Google keeps growing its base with tools for email, content creating, and collaboration with the new Wave tool, and by extending its MS Office crusher, Google Docs. The latest knock in this sense is the expected free Google Chrome OS for computers and mobile phones, that will be a lightweight portable operating system, able to squeeze extra power from any notebook's battery.

Caught in the middle, us users only have to reap the benefits. Finally, the uncomfortable position of  being part of a [search engine] market dominated by a single, unwavering party, is coming close to an end. And if Microsoft and Yahoo won't manage to topple Google over (that's a bit of a long shot anyway), at least we'll be part of a market as Adam Smith had envisioned some time ago. That is, a market with true competition where parties seek to outgrow each other in supply, which can only lead to better offers for users.  So it might not take too long before we'll finally see a change in Google's stark white home page that has stayed the same since its beginning.




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