INTERNET PORTAL Yahoo yesterday conceded its enemy’s enemy is its friend and signed a 10-year deal with Microsoft to challenge Google’s dominance in the lucrative internet search and advertising markets.
The deal, which will see Microsoft provide the search engine on all Yahoo sites, is seen as a major success for Microsoft whose $44.6 billion (€31.8 billion) bid to buy Yahoo was rejected last year.
Yesterday’s announcement, which had been rumoured since May, means searches carried out on Yahoo will be powered by Microsoft’s recently introduced Bing search engine. Microsoft, the world’s largest software company which has struggled to dominate the web, will also hand over sales to Yahoo of advertising on its websites such as MSN.com and Live.com.
Microsoft will benefit from a boost in traffic to Bing which will increase its revenue from associated advertising. Last year, Google had revenues of some $22 billion, almost entirely generated by selling advertisements with its search results.
With such a large prize at stake, many have tried to challenge its supremacy but with little impact. Microsoft’s latest attack, Bing, was only launched last month with a reported $100 million advertising budget. Although it made some early gains from Google, Bing is still lagging behind both Google and Yahoo.
A survey of five Irish e-commerce sites released this week showed that 92 per cent of their referrals still come from Google.
“Google is still the overwhelming favourite for search among Irish online shoppers,” said Aedan Ryan, owner of PuddleDucks.ie, which organised the survey.
Yahoo chief executive Carol Bartz, who replaced founder Jerry Yang following his rejection of Microsoft’s overtures, said the deal would make Yahoo users “say ‘wow’ a lot more often – that’s what makes this deal especially exciting”. Although not referring to Google by name, she said that with one player providing 70 per cent of web searches in the US, the partnership would create “a healthy competitor”.
Internet users will not see major changes as a result of the “Micro-hoo” alliance. US and European regulatory approval means it won’t be implemented until early next year and, even then, a “Powered by Bing” tagline at the end of Yahoo search results will be the only sign of the change.
When Bing was launched, some commentators noted it was also an acronym for “but it’s not Google”. Microsoft’s marketing people could yet have the last laugh.