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What the Microsoft-Yahoo deal means to users

by | Jul 29, 2009 | Advertising & Marketing, Marketing, SEM | 0 comments

By Suzanne Choney
Consumers would see improved Web search efforts by all major players as a result of a proposed search partnership between Microsoft and Yahoo, experts said Tuesday.
“It’s a negative in that we’re going from having three major search competitors to two, but it may be better to have two strong competitors rather than one strong competitor and two weak ones,” said Danny Sullivan, editor-in-chief of Search Engine Land, a site that monitors the search engine industry.
Google, which dominates search with 65 percent of the market, according to online measurement firm comScore Inc., “may be driven to improve their (consumer) offerings somewhat” as a result of the partnership, said David Smith, a Gartner analyst who covers the Web.
Yahoo had 19.6 percent of the search market in June, and Microsoft 8.4 percent. ( is a joint venture of Microsoft and NBC Universal.) The search partnership deal, if approved, would likely not close until early next year, and it could still take another two years before it is completely in place. Antitrust regulators will have to review the proposed partnership’s effects on the Internet advertising market.
The extended reach will allow Microsoft to introduce its recently upgraded search engine, Bing, to more people. The company believes Bing is just as good, if not better, than Google’s search engine. Taking over the search responsibilities on Yahoo’s highly trafficked site gives Microsoft a better chance to convert Web surfers who had been using Google by force of habit, although that, too, will be a struggle.
“People are creatures of habit, and it takes an awful lot to move somebody from a tool that they’ve come to depend upon to something else,” said technology analyst Rob Enderle. “And Google has locked in an awful lot of folks with regard to habit.”
But even Google users “will eventually see improvements that are being driven by real competition now,” he said. “Google has been letting their search engine behave like a cash cow. They really weren’t doing much to it.” Now, he said, the company is “trying to update” its search services, “so the end result is that folks using Google should see some sharp improvements over the next year.”
Sullivan said “most consumers are probably not going to even notice much of a difference when the Microsoft-Yahoo deal is finally implemented. On Yahoo, the search that they see will come over from Bing with a Bing logo, but by and large, it will still look like Yahoo to them.”
What’s unknown, he said, is “what’s going to happen in other parts of Yahoo, because search is more than just searching the Web. For example, when you do a map search — maps are a search — Yahoo has a local area search. We don’t know if that’s going to continue to be powered by Yahoo or if they’re actually going to get their results from Bing.”
Smith said it is search engine advertisers who will feel the difference in the change, not consumers. Advertising “does affect what consumers ultimately see, but it’s not something that they will notice directly,” he said.
“The only thing that would be different — not that most people notice this — is that for people who use Yahoo search, it would be basically fulfilled by Microsoft, so that you’d get pretty much the same results as if you were using Bing,” he said. “Whereas today, you may get different results, because not every search engine gives you exactly the same results.”
In return for turning over the keys to its search engine to Bing and promoting it, Yahoo will get to keep 88 percent of the revenue from all ads that run alongside search requests on its site for the first five years of the deal. Yahoo also will have the right to sell ads on some Microsoft sites.