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Jul 17
2009

Microsoft and Yahoo: Just Get It Done

Posted by meggebrecht in YahooSteve BallmerMicrosoftGoogleCarol Bartzbing

meggebrecht

Can’t Microsoft and Yahoo get together already? After talking and talking and talking, Microsoft and Yahoo are reportedly on the verge of finally forging a search advertising alliance.

According to AllThingsDigital, top Microsoft execs are in Silicon Valley today, hammering out the final details, and a deal could be announced as early as next week.

While Microsoft’s takeover bid was rejected by Yahoo leadership last year, that hasn’t stopped CEO Steve Ballmer -- who isn’t among the group in California today -- from talking endlessly about a potential partnership:

Washington Post, December: “We offered less than they wanted. We did move on. We've had some discussions subsequent to that. We have not re-engaged in the discussions about the acquisition of the whole company. We are discussing other forms of strategic cooperation.”

Business Week, March: “There is a fairly compelling set of economics that underpin a search partnership.”

July: “Over time, there's still a good opportunity to do a deal. … Obviously, I spoke very strongly about my views on the economics of a search partnership with my bid last year.”

But Yahoo CEO Carol Bartz has been playing hard to get in her public comments: “If we ever have a deal with Microsoft, it will be announced publicly and until we do, we have nothing to say,” she told shareholders in June. One month earlier? “If there’s boatloads of money and the right technology involved, would we do a deal? Sure. It’s that simple.”

There must be boatloads of money on the table.

With the launch of Bing last month, some analysts have questioned whether a search deal with Yahoo still makes sense. In June, Bing helped Microsoft grow its share of the search market from 8 percent to 8.4 percent, according to comScore; Yahoo’s share fell from 20.1 percent to 19.6 percent. Add them up and double the number and you still fall well short of Google’s 65 percent.

And the search advertising market? According to SearchIgnite, Google dominated in the second quarter, with 77 percent of the search spend, compared to Yahoo’s 17 percent and Microsoft’s 6 percent.

But despite its modest impact thus far, Bing has garnered largely positive reviews and Microsoft is clearly willing to put money behind it. Pair that momentum with Yahoo’s search advertising business? Maybe you’ve got something. Finally.

Comments (2)Add Comment
Mel Duvall
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written by Mel Duvall, July 17, 2009
On one hand it doesn't make sense for Microsoft to continue seeking a deal with Yahoo given the success they've been having with Bing. But, as you note, even with that success, Google still claims 77% of the search spend. I'm doubtful Google will be threatened even with the combined resources of Bing and Yahoo.
Jay Rajani
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written by Jay Rajani, July 17, 2009
Don't count MS out of the game just yet. Their Bing marketing campaign has only recently gotten out of the gates and their recent ads that tout PCs as a cheaper alternatives is starting irk Apple. Ultimately, if they do make a deal with Yahoo a solid marketing plan should help them claw their way into increased market share. This company has been threatened every decade in some form and have managed to survive.

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