Tuesday, July 28

Microsoft Yahoo! Search Deal for Real?

Update: It's official: Microsoft assimilates Y! search.

It looks like it's finally happening: BoomTown and Wall Street Journal report that a deal is very close and could be announced as soon as tomorrow.

BoomTown reports:
Sources said Microsoft search technology will be used on Yahoo sites, although Yahoo would still sell search ads, which makes the deal much smaller than ones previously envisioned, which included Microsoft taking over both search and search advertising.
If it goes forward, I wonder what this means for the search and advertising teams at Yahoo!. Will the teams re-organize, be cut, or become part of Microsoft? What is the future of Yahoo!'s ad platform that they have invested a lot of time and money into?

I'm apprehensive about the implications of the deal for Y! and the great people there. I also think that Y! provides a solid third alternative search platform. Having only two major engines decreases diversity, which could be problematic in the future.


  1. My wild-ass-guess:

    The computational advert science and research groups might be fine, they may be better than MS's teams anyway. They are tackling good hard problems in advert, and Y! is also underestimated in the perceptions of the industry. There is still a TON of adspend going into Yahoo's display and contextual networks as well as sponsored search... 70% of adspend in contextual/display is NOT going to Google's AdSense.

    I would take the rumor that MS is not taking over that part as evidence that Yahoo is better at it.


    Sounds like the Yahoo search team is DOA.

  2. I have no idea what's being planned for the employees of both companies (and I have friends at both), but I'm not sure that Yahoo and Microsoft separately competing with Google is necessarily better for consumers than their joining forces. Of course, it remains to be seen if even a joint effort can mount an effectively challenge Google's dominant market position.

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  5. Though, to your point about diversity, it will be sad if this kills off Yahoo! BOSS.

  6. Daniel - Exactly my point about BOSS.
    I think Y! has done a good job of pushing the ecosystem with BOSS, SearchMonkey, etc...

    More importantly, if Y! wasn't working on search, would their infrastructure teams have created Hadoop and Pig?

    Y! supports open systems and platforms, which Microsoft does not (except indirectly through acquisitions).

  7. I think I agree with Daniel here, ask.com, MS and Y! have all been trying to beat the Google and failing. Perhaps the two combining tech and teams they will get something compelling together. My take is that web search is nearly a commodity at this point and someone must invest heavy and produce something disruptive. Maybe these two should court twitter, facebook etc for data and power their search. People need a reason not to use Google, that perhaps means that what and how content is indexed is more important that beating google at ten-blue-links.


    Apparently the deal includes both MS and Y! pushing ads into the system... What's not clear is which system will be used to match searches to ads and rank them.

  8. If you're looking to create a competitor to Google, I think the combination of technology and user data makes a lot of sense. However, I think that Y! does a lot to sponsor research and community in IR that may not be matched at the same level by Microsoft. In this case, fewer stronger competitors isn't necessarily a good thing.