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What the Yahoo-Microsoft Search Deal Means to Everyone

Arnold Zafra

07/30/09

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Google’s Marissa Mayer said the Yahoo-Microsoft search deal will not be good to industry competition. Specifically, she says that it will hamper innovation. But the Yahoo-Microsoft camp claimed that the recently announced search and advertising deal said other otherwise – that the deal will accelerate innovation, aside from generating efficiencies and create a stronger business than either company could create on their own.

But what will be the benefits of the Yahoo-Microsoft search and online advertising deal really to advertisers, web publishers, Yahoo and Microsoft, and most especially to us – consumers? Here’s a recap of the official documents released to the public outlining the benefits of the Yahoo-Microsoft Search Deal to consumers, advertisers, web publishers and to both companies.

For consumers, the search deal will:

  • promote innovation that will generate better search experience for users, more innovation in search technologies, as well as more meaningful and relevant ads
  • a more competitive alternative search that either company can offer if they were doing their search business on their own
  • more transparency and choice when it comes to search engine practices including user privacy, security and other issues.

For advertisers, the search deal will”

  • provide a single advertising platform that will give them more value for their ad spending; give users more relevant ads and drive more clicks and revenues
  • provide a more competitive alternative to search advertising
  • make search advertising more cost-effective in managing large-scale search advertising campaign

For web publishers, the search deal will:

  • offer more competitive bids fo search syndication deals
  • give more compelling advertising avenues to reach more users
  • provide greate value and transparency

For Yahoo and Microsoft, the deal will:

  • help them to more effectively monetize search investments; generate revenues for Yahoo from its search assets and Microsoft to wring greater efficiencies from its existing search business and generate increased revenue
  • create more vibrant, competitive Internet ecosystem, again by providing more compelling and sustainable search alternative to Google.

Interestingly, the benefits outlined by the document was very clear in saying that the Yahoo-Microsoft search deal is aimed at offering  an “alternative” to users. Alternative having reference to Google’s dominance of the search and search advertising market.

Google's Marissa Mayer said the Yahoo-Microsoft search deal will not be good to industry competition. Specifically, she says that it will hamper innovation. But the Yahoo-Microsoft camp claimed that the recently announced search and advertising deal said other otherwise - that the deal will accelerate innovation, aside from generating efficiencies and create a stronger business than either company could create…
  • The propaganda in the joint announcement is to be expected.

    If the deal goes through consumers will lose their third option among the major search algorithms. Maybe this will give Ask an opportunity to build up its search share but it will have to sever ties with Google to do that.

    If the deal goes through advertisers can expect to see their traffic acquisition costs increase as more bidders are pitted against each other. Unless the combined inventory is segmentized, people won't be able to target by demographic the way they can now.

    If the deal goes through Microsoft will be able to walk away from Yahoo! in ten years with all the search business and Yahoo! will have to start over from scratch (assuming it can even survive that long).

    If the deal goes through the cost of optimizing for multiple search engines will go down and homogeneity will creep into more queries, thus eliminating more niche marketing opportunities for small sites as the big database-driven, made-for-advertising sites take over.

    If the deal goes through we'll see less competition in the search industry and competition for search results placement will intensify.
    .-= Michael Martinez´s last blog ..Microsoft and Yahoo! antitrust concerns =-.
  • As for my opinion, I think that it's a big leap for Yahoo! and Microsoft Deal is a good change for both parties.

    This is just an evidence that they are finding ways on how to face their future, so I guess it's okay.
    .-= Bennie Stark´s last blog ..Dallas Millionaires Meet Up For The First Time =-.
  • I'm sorry Arnold but rehashing the MS/Yahoo publicity doesn't make an outstanding post.

    Harvard Business did an original take on the deal which is well worth reading, it includes:

    We don't have all the details of the alliance, but what we have is not encouraging. The deal is for 10 years. That sounds impressive if you don't know that most alliances — especially those in the internet world — don't last half that long. The companies will cooperate on technology and search. But they will keep separate web presences, separate sales forces, separate user data, and so forth. No wonder that they expect implementation to take 24 months — an eternity in Google Standard Time.

    Then there's the pre-nuptial agreement on what is left out of the alliance: "each company's web properties and products, email, instant messaging, display advertising, or any other aspect of the companies' businesses." We are told that "in those areas, the companies will continue to compete vigorously." Ah, co-opetition — the defensive shield of partners unwilling to commit — surfaces yet again. Google will rest easy; after all, it has its sights on precisely these areas where the new partners agree to fight each other to the death.

    It may be surprising that the PhDs at Yahoo and Microsoft could not come up with a smarter deal. But it shouldn't be. Business combinations are fraught with emotions that interfere with strategic thinking. Even when partners intend to create joint value, govern a combination efficiently, and share returns equitably, these goals easily get overshadowed by dysfunctional thoughts. Like control and independence. Pride and arrogance. Secrecy and defensiveness.

    http://blogs.harvardbusiness.org/now-new-next/2...
  • Seems like it a good deal since Yahoo clearly did not want to focus on search. At least you know Microsoft is committed to search and will try to better search results.
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