Microsoft and Yahoo have received clearance from the Justice Department and the European Commission to begin a 10-year partnership in the search engine market.
Under the new partnership, Yahoo will be sales force while Microsoft will power the search. Yahoo will not abandon the search market, instead its search algorithm will be integrated within Bing, Microsoft’s own search engine.
According to a statement released by Yahoo, Bing search results will be integrated with “rich Yahoo! content, enhanced listings with conveniently organized information about key topics, and tools to tailor the experience for Yahoo! users.”
The terms of the partnership has Yahoo receiving 88% of the search revenues generated on sites owned and operated by Yahoo. “I believe it establishes the foundation for a new era of Internet innovation and development,” said Carol Bartz, Yahoo’s Chief Executive Officer. Users should be able to see a change once the terms of the partnership are implemented. Complete US implementation of the search algorithms should be in place by the end of 2010, and global implementation is scheduled to be completed by 2012.
Microsoft and Yahoo have set up a website on how the partnership may affect advertisers and users. (http://advertising.microsoft.com/search-alliance/home) Unlike the buy-out that Microsoft attempted in 2008, the partnership calls for each company to maintain a separate identity. Instead, Yahoo’s search will begin to display a “powered by bing” logo.
The previous takeover of Yahoo by Microsoft was abandoned when Yahoo announced that it had made a deal with Google. This time around, Google did not oppose the deal.
“There has always been robust competition in our industry, which keeps us on our toes and benefits users,” said Adam Kovacevich, Sr. Manager of Global Communications and Public Affairs at Google.
Google still maintains 65% of the search engine market, according to comScore, and online data tracker. Yahoo trails at a distant second with 17% and Microsoft is third with 11.3%.
One major factor in the search engine markets is the type of browser used by the user. The top three Internet browsers are Internet Explorer with 61.93%, Firefox with 24.44% and Chrome with 5.37%, according to Net Applications. In the past six months, Internet Explorer has lost 4.85% of its market share while Firefox and Chrome have gained 1.45% and 2.38%, respectively. The gain by Chrome almost doubled its market share, going from 2.84% to 5.22%
Many browsers have a default search engine integrated into them. Firefox and Chrome both have Google as their default search engine. Internet Explorer’s market shares are divided almost between three versions: 6,7 and 8. Versions 7 and 8 both have Bing as their integrated search engine, while version 6 does not have any.
Yahoo does not have its own Internet browser.
By having an integrated search bar, users do not have to visit a website to start their search, cutting out a step in the process.
Microsoft and Yahoo, at their current search market holdings, still are not powerful enough to overtake Google. Their cooperation, however, may provide enough innovation that they may rival Google in the search engine market.
“Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company,” Microsoft CEO Steve Ballmer said at the conference.
Another front on the battle for search engine supremacy is the cell phone. Currently, Android, Google’s cell phone operating system, and the iPhone both use Google and their default search engine. There have been speculations that Microsoft is in talks with Apple to have Bing become the default search on all iPhones. When asked it, Ballmer declined to comment.
Market shares for Microsoft, Yahoo and Google were not greatly affected by the announcement.
