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The Microsoft–Yahoo! Deal

Posted on Wednesday, Jul 29th 2009

Last week I wrote Yahoo! Going Nowhere, “So far, I have seen absolutely NOTHING from Carol Bartz on a compelling strategy.”

More than two years back, I wrote in Yahoo!’s Turnaround Formula:”So, the first order of business for Yahoo! is to understand that brand advertising — CPM-based banner ads — is also big business, and concede the broad CPC-based Search business to Google.”

Today, for the first time, Yahoo! has signaled a constructive direction with its search deal with Microsoft. Simple. Microsoft’s Bing will be used as the technology engine. Yahoo!’s ad sales force will sell it. Yahoo! keeps 100% of the revenues for the first two years. Ninety percent thereafter. The two companies together now start this game with 35% market share.

This is a reasonable start. A necessary step, but not sufficient. MyYahoo! still remains an under-leveraged asset. Vertical Search and Personalization opportunities still abound in Yahoo!’s stronger verticals. But for the moment, yes, this is a step in the right direction – the coming together of Yahoo! and Microsoft to put up a fight against Google.

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I am still not sure …. why are they not focusing on improving the quality of their search engine … atleast they can get the pages crawled .. I still see Google crawling 100 paes when yahoo is at 30s and bing with less than 10 pages …

Faster is better, Google is faster …

Both Yahoo & MS can’t create better Google, only better teams can do that ..

I think this is what is the problem
1) Hell with complexity, make life simpler, Google is simpler …. Yahoo is too complex, have you ever created a yahoo mail and compare with gmail creation … SIMPLE, SIMPLE .. same with ads and search … Adavance search has country but if I select country there are 2 types of results 1) Pages relevant to India 2) Pages from India …

I can write a ton on what Yahoo and MSN should do to get better ….

I am working on a different search engine, lets see how far can I go with it …

Aji( Wednesday, July 29, 2009 at 1:02 PM PT

Kudos to Ms. Carol Bartz for standing up to the harsh truth — Yahoo stands no chance in the Search business game with Google and Microsoft battling it out. Folks booing her for throwing in the towel are, well, idiots! It *IS* the reality, the right thing to do and shows how strong Bartz is to drive this through Yahoo’s “anything but MS” minded head-honchos. Execution — exemplified.

Piyush Wednesday, July 29, 2009 at 5:33 PM PT

I agree with you, Piyush. They need to concede horizontal search, milk to whatever extent possible (which I think this deals allows them to do), and focus on monetization of the other, more promising assets.

Sramana Mitra Wednesday, July 29, 2009 at 6:00 PM PT

Though I love to see how they bing together in the long run .. let me say they wont eataway Google’s business or say lovers! These yahoo ppl dont even know where to challenge google in the search business.. cant they creat a domain for ? This page would have really challenged Google! So many missed opurtunities! As Aji said nobody is in the radar of simplicity except the Google Giant! Let us see!

With warm regards
Osai Chella

N.B: Seen your youtube video! Bit more lumens is missing in that?!

Osai Chella Wednesday, July 29, 2009 at 10:12 PM PT

Nice comments. Two points that I thought of highlighting. One. Yahoo and Microsoft search integration would take a full two years, and Google could use this lead time strategically to their advantage.Two. A very interesting article, which made a valid point that although Microsoft may have 30% of query share post merger, it would have a much, much smaller share of search revenue:

Narayanan Raman Monday, August 3, 2009 at 8:20 PM PT