Microsoft-Yahoo

By rolay117rolay117 (1259002911|%a, %b %e at %I:%M%p)

Welcome to my blog about the Microsoft-Yahoo! search engine deal that took place earlier this year.

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Introduction

In a recent article written in 4Hoteliers, a website dedicated to news about travel, Josiah McKenzie speaks to the hotel search industry and how the Microsoft-Yahoo deal enhances Microsoft's position in the search industry. The deal made by two of the major players in the search engine industry is a step towards dethroning the search giant Google. The deal, which will be discussed in detail later in the blog, encompasses some of the essential features from the two search engines and combines them in hopes of creating synergies that will benefit both companies. In this blog I will discuss the deal in detail, describe how it may effect GOOGLE, and give some personal insight into the future of the search engine industry.

The Deal

Microsoft and Yahoo recently created a partnership between their search engine lines of business. The detail includes four major initiatives:

  • Microsoft's technology and the Bing! algorithm will drive Yahoo! search engine
  • Yahoo will become the single sales force for both companies premium advertisers
  • Self-serve advertisers will use Microsoft AdCenter for both platforms
  • Each company will maintain their separate display advertising business

Although the agreement has already been reach, this deal must go through a number of governmental regulation committees. This committees will analyze the deal to make sure no anti-trust laws will be breach by the consolidation of these two search powers.

What does this mean for Google?

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While currently holding on to 78% of the paid search engine market share, Google probably doesn't see this deal as an immediate threat. In the long-run however, this deal could allow the competitors to slowly eat away that 78% market share and try to balance out the current market situation. With the second and third largest players in the industry teamed up, even though the partnership is limited, the two players relationship could drive innovation in the search industry for years to come. Unless Google comes out with a new, breakthrough technology, expect their market share to fall over the next few years. Additionally, expect Bing and Yahoo! to begin taking drastic measures to steal share from Google. Both Microsoft and Yahoo! have front row seats to Google's success and innovative strategies that are getting them to where they currently stand. With the power of this position noted, expect Microsoft to charge increasing amount of money into their Bing account in order to make a run for that strategic position in the search industry.

Long-term Implications of the Deal

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While the short-run won't see much change in regards to the deal, the long-run will experience the majority. As briefly stated in the paragraph above, the teaming up of the two major players will cause synergies in the search business that will help them eat away at the 78% market share that Google currently holds. With Yahoo!'s established reach and sources, combined with Microsoft's ability for large capital investment, the sky is the limit with this teamwork in terms of development and innovation. One example that I have recently read about in the news is that Microsoft is considering using their large capital
pull to push websites off of the Google search engine. For instance, they would use their money to tell wikipedia.com to take their page of the Google engine and use it exclusively with Bing or Yahoo!. By doing this, Microsoft would be decreasing the usefulness of Google while driving customers to the Yahoo! and Bing search interfaces. This is just one example of many strategies that Microsoft could invest in to steal share from the overpowering Google.

Conclusion

While nothing is certain, the Microsoft-Yahoo! deal could have major implications in the search industry in the long-run. With Google holding a ridiculously strong spot in the industry however, the two will have to slowly work to eat away at the share of their well-established competitor. This deal though, will give the industry an interesting dynamic to follow in the years ahead.

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