Microsoft and Yahoo Unite in Search Deal Against Google

[ElCount]

TECHNOLOGY JULY 29, 2009
Microsoft, Yahoo Near Search Deal
By JESSICA E. VASCELLARO and NICK WINGFIELD

Yahoo Inc. and Microsoft Corp. are close to sealing an Internet-search partnership, said people familiar with the matter, ending a protracted dance and uniting the rivals against Google Inc.

Microsoft, which last year made a failed $47.5 billion takeover bid for Yahoo, would finally win what it wanted most from the Internet pioneer -- huge volumes of queries that run through Yahoo's search engine.

At the same time, Yahoo is expected to reap additional search-advertising business to expand its share of the market.

The agreement, which could be disclosed as soon as Wednesday, includes Yahoo agreeing to use Microsoft's Bing search-engine technology on its own sites, these people say.

One person familiar with the matter said the Bing brand is expected to be used by Yahoo.

A deal between the two companies would immediately narrow the gap with Google.

According to Comscore, Microsoft and Yahoo combined accounted for less than half of Google's 65% share of searches in the U.S. market in June.

Microsoft handled 8.4% of searches that month and Yahoo accounted for just under 20%.

Internet users won't notice a dramatic difference on either Yahoo or Microsoft's sites, since the technology involved in the exchange operates behind the scenes.

Yahoo would continue to handle sales of the text ads that appear next to the search results for its own sites, as well as some Microsoft sites, said the people familiar with the matter.

These people said the deal would involve revenue-sharing from advertising sales. The two aren't expected to exchange hefty up-front payments.

The companies would argue any deal will eventually lead to better search results, in part by giving Microsoft more data to refine its search technology.

Yahoo may also argue that the pact will be a boon to Internet advertisers, helping them more easily reach people conducting searches via Yahoo and Microsoft.

The deal could make it simpler for advertisers to choose an alternative to Google as a vehicle for online-search advertising, said industry observers.

"They should be worried," Danny Sullivan, editor of SearchEngineLand.com, said of Google. "It's going to give Microsoft in one fell swoop a much bigger share of the search market."

Bryan Wiener, chief executive of digital advertising agency 360i, said the proposed deal would make Bing more attractive to advertisers who have been excluding it from their campaigns because its search traffic is relatively low.

Any deal would free up Yahoo to invest in new search ad-sales staff and technology, areas where, he said, it has trailed Google.

Still, Mr. Wiener said it remains unclear whether Yahoo and Microsoft will be able to greatly increase their current combined market share.

"The only thing that can increase that is product development and smart marketing and there is nothing in this deal per se that changes that landscape," Mr. Wiener said. With Google's commanding position, "as long as they focus on their customers, they are going to be fine."

A Google spokesman declined to comment.

Both companies have expressed concern that a deal that reduced the number of search competitors might be opposed by antitrust authorities, the people familiar with the talks said.

These people said Microsoft and Yahoo plan to argue that the deal would enhance competition by helping them provide a stronger alternative to Google.

A spokeswoman for the Justice Department declined to comment.

Continuing to sell search ads could reduce the cost savings that Yahoo could generate from selling its search-advertising business outright.

But it would help Yahoo maintain its relationships with advertisers who buy its other online advertising services, such as selling graphical ads on Web sites.

The deal comes as Microsoft has begun garnering positive buzz for its Internet search engine with the launch of Bing in early June.

But even with Bing, Microsoft Chief Executive Steve Ballmer made it clear in a recent interview that he still favored a deal with Yahoo to help accelerate Microsoft's search business and the creation of a more serious competitor to Google.

—Joann S. Lublin contributed to this article.
Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Nick Wingfield at nick.wingfield@wsj.com

[Luse_Fiasco]

google still rules

theres nothing like google

google is probably 50% of people homepages lol

[nastythavillian]

Stupid ass Jerry Yang would have still been somewhat in charge of his company if he did this when Microsoft first offered...

[Miyagi]

It wont matter much until yahoo and microsoft can start driving alot more traffic peoples way.

We have a few businesses on the net and we dont even optimise for Yahoo or MSN as the traffic isnt substancial enough.

The fact is once your site does well in google then it will do well in any search engine, they should have really halfed the price of ppc on their sites and that would have been a good starting point!

[ElCount]

TECHNOLOGY JULY 29, 2009, 10:57 A.M. ET
Microsoft, Yahoo Reach Search Deal
By JESSICA E. VASCELLARO and NICK WINGFIELD

Yahoo Inc. and Microsoft Corp. on Wednesday struck a deal for a 10-year Internet-search partnership, ending a protracted dance and uniting the rivals against Google Inc.

Under the deal, Yahoo will make Microsoft's Bing search engine the search provider on its Web sites, licensing its own search technology to Microsoft to integrate if it chooses. Yahoo will handle sales of search ads for both companies, using Microsoft's search-advertising technology.

There is no large upfront payment from Microsoft. Instead, the agreement is a revenue-sharing pact, with Microsoft paying Yahoo 88% of the search revenue generated from its sites during the first five years of the agreement, the companies said.

Microsoft, which last year made a failed $47.5 billion takeover bid for Yahoo, finally wins what it wanted most from the Internet pioneer -- huge volumes of queries that run through Yahoo's search engine. At the same time, Yahoo will reap additional search-advertising business to expand its share of the market.

"We face a formidable competitor in search," Yahoo Chief Executive Carol Bartz said on a conference call. "What this deal is really about is scale."

A deal between the two companies narrows the gap with Google. According to research firm Comscore, Microsoft and Yahoo combined accounted for less than half of Google's 65% share of searches in the U.S. market in June. Microsoft handled 8.4% of searches last month and Yahoo accounted for just under 20%.

The transaction is subject to a regulatory review, but the companies said they are hopeful it could be sealed by early 2010. Prior to announcing the deal, people familiar with both companies' thinking said the parties are worried that regulators may see the deal as reducing competition by removing Yahoo from the search market. But these people added that Microsoft and Yahoo plan to argue that the deal would enhance competition by helping them provide a stronger alternative to Google.

Microsoft Chief Executive Steve Ballmer said he expects "opposition" to the deal from an antitrust perspective from what he dubbed "the competitor," a clear reference to Google. But he said: "We think we have a good case for how this [deal] improves competition."

Internet users won't notice a dramatic difference on either Yahoo or Microsoft's sites, since the technology involved in the exchange operates behind the scenes. Ms. Bartz said the Yahoo branding will remain on the top of the search pages on Yahoo sites but the results will say "powered by Bing" at the bottom.

Ms. Bartz downplayed the lack of an expected upfront payment to Yahoo from Microsoft. Many analysts had envisaged that Yahoo could receive up to $1 billion in cash. "As far as we're concerned, the boatload of cash is preserving our revenue line," Ms. Bartz said. "Having an upfront payment didn't really help us from an operating standpoint."

Microsoft is paying, by Mr. Ballmer's own admission, a high cost too, through its revenue-sharing agreement, for access to Yahoo's network. Mr. Ballmer said Microsoft will be investing "several hundred million" dollars in the short term, including some additional capital expenditures.

The companies argued that any deal will eventually lead to better search results, in part by giving Microsoft more data to refine its search technology. They also argued that the pact will be a boon to Internet advertisers, helping them more easily reach people conducting searches via Yahoo and Microsoft.

The deal could make it simpler for advertisers to choose an alternative to Google as a vehicle for online-search advertising, said industry observers. "They should be worried," Danny Sullivan, editor of SearchEngineLand.com, said of Google. "It's going to give Microsoft in one fell swoop a much bigger share of the search market."

Bryan Wiener, chief executive of digital advertising agency 360i, said the deal would make Bing more attractive to advertisers who have been excluding it from their campaigns because its search traffic is relatively low. He added it would free up Yahoo to invest in new search ad-sales staff and technology, areas where, he said, it has trailed Google.

Still, Mr. Wiener said it remains unclear whether Yahoo and Microsoft will be able to greatly increase their current combined market share.

"The only thing that can increase that is product development and smart marketing and there is nothing in this deal per se that changes that landscape," Mr. Wiener said. With Google's commanding position, "as long as they focus on their customers, they are going to be fine," he said.

A Google spokesman declined to comment.

Yahoo anticipates that the deal will save the company $200 million in capital expenditures and $500 million in operating income annually, according to the press release.

The deal comes as Microsoft has begun garnering positive buzz for its Internet search engine with the launch of Bing in early June. But even with Bing, Mr. Ballmer made it clear in a recent interview that he still favored a deal with Yahoo to help accelerate Microsoft's search business and the creation of a more serious competitor to Google.

—Joann S. Lublin and Jessica Hodgson contributed to this article
Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Nick Wingfield at nick.wingfield@wsj.com

http://online.wsj.com/article/SB124886852386589989.html#mod=testMod

[3x10^8 m/s]

when the economy is down...monopolies spawn and if already existed, thrive.

ONE.

[ElCount]

when the economy is down...monopolies spawn and if already existed, thrive.

ONE.

...........

Care to explain?

[3x10^8 m/s]

...........

Care to explain?

not to u, no.

ONE.

[Luse_Fiasco]

monopolies join forces

[The Flying Guillotine]

when the economy is down...monopolies spawn and if already existed, thrive.

ONE.

c/s.

just check the Joint Commission to the person who said do u care to explain

[Sosa]

"Competition is the hallmark of a free enterprise economy. For the past thirty years, however, corporate America has been doing everything it can to cut competition, with major corporations merging and consolidating at every opportunity." Lou Dobbs

[SiC]

I heard about this on NPR this morning.

I'll give them credit for making moves............but we'll see if it works out in their favor. As it has already been mentioned GOOGLE is THE search engine in everyone's minds and is most folks default page.