Yahoo quits search game, sells its soul to Microsoft

Posted on 30-07-2009

And then there were two. It’s official, folks, Yahoo is out of the search engine battle and now it’s all down to Microsoft vs Google.

On Wednesday, MS and Yahoo announced a search partnership as reported earlier, where Yahoo’s search engine will be powered by Bing while the company still gets a large share of the ad revenues. And it saves on all the massive costs of maintaining and developing a search engine and its servers.

Bing, on the other hand, gets access to one of the largest user databases on the Web, given that Yahoo is still one of the biggest online entities and has a huge loyal fanbase. For a new search engine, this deal is nothing less than striking gold.

“Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides,” said Yahoo CEO Carol Bartz.

“Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness,” noted Steve Ballmer, Microsoft CEO.

Yahoo CEO Carol Bartz (left) and Microsoft CEO Steve

Ballmer sign a mock deal at Yahoo headquarters

Image: TechCrunch

The actual nitty-gritties of the deal are really not that interesting to most of us as they talk about the amount of share that the two companies get, what kind of ratio the monetary split will be, etc. The one big item was the period of the deal: 10 years.

Essentially, Microsoft could get all the data it needs and kick Yahoo out of the equation in this period. It’s the ominous ring of the death bell, and the rejection of MS’ initial offer to buy them out is now sounding like a fatal step for Yahoo.

With the two companies combined, they now control about 30% of the online search business, while Google remains the dominant player with around 65% of the share. The MS-Yahoo deal actually throws up a valid competitor to Google – something that generally works in the favour of consumers as the two parties try to outdo each other.

The partnership will start rolling out within the next 24 months, the two companies said. A full run-down of the deal can be found at Microsoft’s press page and the special site set up for this deal, Choice Value Innovation.

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