Week in review: Microhoo, at last
After 18 months of fits and starts, press leaks, and behind-the-scenes drama, Microsoft and Yahoo this week signed a 10-year search deal that will see the two companies join forces to take on Google.
Under the deal inked Wednesday morning, Microsoft's technology will power Yahoo's search results, while Yahoo will handle ad-selling duties for both companies' search sites.
Cheery CEOs: For Yahoo's Carol Bartz and Microsoft's Steve Ballmer, happiness is a signed search deal.
(Credit: Yahoo/Microsoft)It's expected to go into effect in 2010 and improve Yahoo's profitability, though not its revenue, the companies said. Yahoo will get 88 percent of search revenue created by its sites during the first five years, while Microsoft will guarantee a certain level of search revenue for 18 months in each country.
Less expansive than the all-out $44 billion acquisition Microsoft proposed last year--and smaller than even some of the search partnerships once discussed--the deal does allow the companies to share resources and combine their engineering efforts, as noted in reporter Ina Fried's breaking story. Even together, however, the two companies have only about 30 percent of the search market compared with Google, which has more than twice that amount.
The news finally puts an end to one of the tech industry's biggest will-they-or-won't-they stories, noted reporter Tom Krazit. It also marks the end of an era for Yahoo as an independent search company, allowing it to further cut costs and rebrand itself as a digital media company.
It likewise transforms Microsoft, which recently unleashed its new Bing search tool, into a clear No. 2 behind Google in search technology, with what should be a steady stream of Internet-derived revenue. (Click here for Krazit's article on how the partnership was consummated and why it happened now--or here for a breakdown of the deal's advantages and disadvantages.)
Of course, while the deal mark the culmination of months of Microhoo maneuvering, it's also just the beginning of a long road. Not only will the companies have to win regulatory approval for the deal, they'll also have to figure out how to bring together disparate approaches to the search market.
Microsoft has spent much of its energy in the last couple years refining its core technology, improving in vertical categories, and rebranding its Web search under the Bing moniker. Yahoo, meanwhile has put a lot of energy into tools that allow others to build on its technology, including the BOSS (Build your Own Search Service) and SearchMonkey efforts.
Microsoft Senior Vice President Yusuf Mehdi, in an interview with Fried, said this company hasn't looked at the specific lines of code in that area, but is open to trying to take Yahoo's best ideas and integrate them into Bing.
The good news, points out reporter Stephen Shankland, is that both Microsoft and Yahoo can now get back to business. The Microhoo concept has been reduced from a giant cloud of uncertainty hanging over both companies to merely a complicated partnership between two rivals with Google as a common foe. The range of possibilities has been pruned back to a much more manageable scope.
And, specifically Yahoo, Krazit notes, can go back to being first and foremost a media company, in the business of attracting as many people to its properties as possible in hopes of selling lucrative ad deals on those pages.
That means content will be king, and Yahoo, as Krazit opines, will have to figure out whether it needs to expand its current offerings, pare down some of the less frequently used products, or tap an outsourcing strategy for this area too.
More headlines
Sprint to buy Virgin Mobile for $483 million
The nearly half-billion-dollar acquisition bolsters Sprint's prepaid offerings, which also include the Boost Mobile brand.• Sprint Nextel bets big on prepaid wireless
• Sprint's customer losses continue in 2nd quarter
Apple blocks Google Voice app for iPhone
The application never made it through the approval process, and all apps using Google Voice have been pulled from the App Store.At Black Hat and Defcon, hackers talk shop
This week's gatherings in Las Vegas are for those who know how to hack--and for those who want to stop them.• Researchers attack my iPhone via SMS
• Hackers bypass parking meters
PS3 and PSP slump, Wii hammered too
Sony's earnings shine light on a poor quarter for its gaming division. Nintendo's Wii also took a big hit, with unit sales cut in half compared with last year.
Ballmer: Windows will get more competition
Microsoft's chief addresses the state of the PC business and Windows' place within it, in the wake of "a wild quarter."• Windows 7 activation cracked?
• Qi Lu: Search could be hugely profitable
• Mundie: The desktop of the future is a room
Report: Spam and malware at all-time highs
Spam levels have jumped 80 percent since the first quarter, according to the latest report from McAfee.• Report finds fake antivirus on the rise
Sale of Google's stake values AOL at $5.7 billion
Time Warner purchased Google's 5 percent stake in AOL for $283 million earlier this month, paving the way for an AOL spin-off and valuing the company well below 2000-era levels.• AOL revenue slides 24 percent in 2nd quarter
Microsoft will open stores in Arizona, California
Software maker confirms it has signed the first two leases as it follows Apple's lead and opens its own set of retail stores.
Congress: File sharing leaks sensitive data
Sensitive files like Secret Service safehouse locations, military rosters, and IRS tax returns can still be found on file-sharing networks, according to new report.• Dutch court tells Pirate Bay to scram, or else
On Road Trip, making a mobile, off-the-grid office
CNET News reporter Daniel Terdiman set out to be able to get online deep in the Wyoming wilderness. How did he do?• On Road Trip, comparing simple video camera options
• Full Road Trip coverage
Also of note
• Report: eBay is building a Frankenskype
• Single misplaced '&' caused latest IE exploit
• Twitter's new home page: Information, not status updates
• McAfee acquiring MX Logic
• Facebook erroneously sucking in Twitter updates
Michelle Meyers is an associate editor who tracks online happenings in media, entertainment, and politics. E-mail Michelle. 
1) Internet services (email, instant messaging, twittering, chatting, social networking, etc.)
2) media / news (entertainment, news, music, video, advice, etc.)
3) Consumer services (shopping, ads, autos, etc.)
There are many more of these services and features and the key is probably to have them come from in-house and be exclusively available to Yahoo only. If only you have good content, more customers will come to your website.
On Microsoft and Bing search engine, I think working together with Microsoft will help Yahoo get a better search engine than Google, and word of mouth and advertisements should take away the market share. Google once said that competition is only one click away, and that's true in a sense. There are very low barriers to entry for Internet search engines. Yeah, Google is dominant today and "googling" has gone into the dictionary as a word, but Ford and GM were dominant too, and look at how many barriers to entry there are in the automobile industry, the Japanese automakers still defeated them eventually through decades of hard work and making good quality cars.
The Internet is a different beast, and it won't take decades, it can be years to topple a king. Facebook toppled MySpace in the number of users, Firefox is gaining on Internet Explorer, I can go on and on,... Microsoft is less of a threat to Yahoo because I can never see Microsoft becoming an Internet media company, they have MSN and it is a web portal that competes with Yahoo but their corporation is so diversified, it's hard for them to focus on 1 industry and do a good job. Microsoft is a potential future threat to Yahoo, but today Google is a bigger threat, their company is entirely Internet-based and was born from the Internet. Google's territory is directly related to Yahoo's territory, believe it or not, Google is trying to dethrone Yahoo and Microsoft now.
First of all, content on the internet is not the same as content on old media. The "new media" has a lot more interaction and social networking. We are in the infancy of "new media" where communications and information can be spread to billions with a click of a mouse.
I am not seeing the layoffs of computer engineers or media people in Yahoo. These two sides have fought each other, but a good CEO would find a way to make them work together to DELIVER content and media OVER THE INTERNET in the most productive, efficient, and money-making way.
This is the Yahoo of the future, not only the the best Portal on the Internet, but the best place to go on the Web.
Search is not only important because it generates revenues, but for the simple fact that Google is stepping on Microsoft's turf, they use their profits in search and advertising to plow into the OS and office productivity software, and they give away these for free because they don't need the extra revenues. It's like one of your competitors, selling a product at below cost in order to drive out the other businesses out of business.
Well, two can play at that game, Microsoft will step on Google's turf, with their own products and services, namely Bing. Bing will hopefully compete with Google's search and advertising, thus reducing Google's revenues in turn. Besides, Windows Mobile 7.0 (for cell phones), Xbox Live, cloud computing Azure platform that Microsoft has really fits into this. They're all going to be connected to services "in the cloud."
Never trust MS. They truly are the "Evil Empire"
Amen
How do you know that Google doesn't already give an inflated rank negative news results about thier competitors?
You don't, and you never will. The only way to keep both of them honest is for them to be credible competitors for each other. As long as it's not a one-horse race, neither of them can risk getting caught doing something like that.
Never trust trolls. They truly are ignorant.
Amen.
"How do you know Google isn't already doing that with their results?"
They already do.
Not only to they favor certain companies, but they also allow sponsored results.
It irritates me everytime I search on Google and the first three results are sponsors. Basically, you can buy Google out into putting your company first in their search results. So far, Bing doesn't do this.
But it is always a nice laugh when someone like BogusBasin jumps on the ignorant anti-Microsoft bandwagon and accouse Microsoft of something that other companies are already doing.
Amen
Msn has the most beautiful home page ever.another thing, is that they need to bring back that butterfly. i mean the MSN Explorer software. no wonder folks are not Giving Up xp. we need it on vista and window 7
2. I have just tried mistyping something on Bing (Benfrica instead of Benfica) and it recognized the mistake peerfectly, so if Bing is worse than Google it's certainly not for that.
3. Nobody needs MSN Explorer, what we need is strong competition and that is what Microsoft and Yahoo are giving us.
(at least not to those unbiased that have not fallen for the Gmail hype and have given the Webmail leader a try), because they always seem to have Gmail features years before Gmail ever gets them (drag-and-drop, IM)...
- by Fil0403 August 1, 2009 1:41 PM PDT
- Google is still king, but competition is always welcome and Microsoft and Yahoo! certainly have the resources to mount some serious competition to Google, we only have to win with this.
- Like this Reply to this comment
-
(11 Comments)