It looks like Microsoft and Yahoo have finally agreed to a search and advertising deal. AllThingsD is reporting that an announcement will be made between now and tomorrow. Wall Street Journal is also running a similar story as well as Advertising Age. While both Yahoo and Microsoft refused to confirmed anything about this, the signs have been pretty much sent out the past couple of days. But perhaps Yahoo CEO’s comment about Bing gave away the validity of the said agreement. Ms. Bartz openly congratulates Microsoft for what it has produced in Bing when Yahoo reported its Q2 Revenue Report. In addition, Ms. Bartz also said that Yahoo will be focusing on its web portal which is the company’s strongest online presence until now.
As for the details of the search and advertising agreement – it will be a revenue sharing deal but would entail Microsoft providing search technology on Yahoo sites as well as using its AdCenter as the backbone of both Yahoo and Microsoft advertising programs. This could mean the end of Yahoo’s Panama, Microsoft AdCenter and Google AdWords’ competitor in the online advertising market.
Now, will these have an impact on Google’s dominance in the search advertising business or search market as a whole? That remains to be seen. Combining Microsoft and Yahoo’s search market share would not even equal to half of Google’s search market share.
The deal could work both ways. On the one end, it will certainly benefit Yahoo but not as much as it would benefit Microsoft. Microsoft is gradually gaining positive grounds with its Bing search engine. And who knows, eventually Bing might power searches in Yahoo’s content network. By that time, Google will be facing stiff competition. But for now, Google may still relax and conduct its usual business. This partnership is not yet a threat. But it might be in the long-run.