Microsoft and Yahoo are joining forces in an effort to compete with Google in the search wars. Yahoo algorithmic results will be powered by the Microsoft / Bing algorithm and the paid results will be powered by AdCenter.
The announcement is good news because it’s clear that the two companies can’t compete with Google by themselves. I doubt it will make much difference in the UK because Yahoo has a very small market share as shown in the Hitwise data below.
The only drawback is that rollout is expected within 24 months following regulatory approval by which time Twitter or Facebook will probably have more search volume.
- Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing web search platforms;
- Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology.
- Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.
- Each company will maintain its own separate display advertising business and sales force.
- Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology.
- Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites.
- Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!’s O&O sites during the first 5 years of the agreement.
- Yahoo! will continue to syndicate its existing search affiliate partnerships.
- Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country.
- At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.
- The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.
Patrick Altoft is Director of Search at Leeds based digital & SEO agency Branded3. Patrick also runs Blogstorm.You can get our blog posts delivered for free by email every day - simply add your email address to the box below or alternatively grab the RSS feed.
{ 15 comments… read them below or add one }
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We are doing most of our search marketing on Yahoo! Panama. However the time period before which they would roll out AdCenter to replace Pamana might be considerable and I am not sure if they will stop innovating on that area. A cause of concern for us. Not sure what will happen to their much fabled desktop Yahoo! Search Engine marketing program now that it is semi official. hmm….
More comments from mengliangYou seen mention mention about what might happen to SiteExplorer. Would be bad to lose access to that as a result of this
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How would, or could, Twitter or Facebook have more search volume in two years than Microsoft and Yahoo! combined?
I mean, for one, Facebook doesn’t appear to have plans to enter into search (and it would be hugely foolish – they’re a communication platform) – but doesn’t Facebook also have a deal with Microsoft to use Microsoft’s technology for Facebook’s internal search anyway?
Twitter search seems equally unlikely to stand a chance, as they’ve yet to enter the market, their audience is tiny, and the whole concept of tweet-powered search ranking seems ridiculous and useless anyway.
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From a purely selfish point of view I am happy with this – I own many exact match domain names and they are all ranking better in Bing than Yahoo. If this deal moves my good rankings into Yahoo Search also, its more £ for me
More comments from Phil GreenFind me on Twitter
Dan 2 years is a long time and while it might seem far fetched now with Twitter launching a new homepage today with search the main feature it’s fair to assume they might do something major.
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Microsoft is really trying to give Google a run for its money. While I don’t see Bing as competition for google at the moment, it would be nice to see what new features Bing brings to the table to compete.
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Hi Patrick!
More comments from Branko ZecevicIt is always nice to see some competition!
This will lead to constant improvement in both giants.Google is more popular and stronger,that’s a fact. But nobody knows what will be in near future.
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i think microsoft+yahoo can try to compete with Google, but google just own the market. It’d take a considerable upping in efforts from the combined party to really make a dent .
as for facebook and twitter becoming MAJOR search players in the next couple of years… i don’t think so. Not in terms of serious competition – they’re not on the scene at all now!
More comments from Luci@Phil – I too have great success with exact match domains with Bing and Yahoo, but there will probably be big changes in the algo 24months down the line.
I still think it will make life better for everyone (escpecially SEOs) when we don’t have to be at Google’s mercy.
More comments from SEO-DoctorI am sure I will join them too late, too far left Google on all fronts of them.
More comments from Victor FominFind me on Twitter
I’m sure that it’s time for some fundamental changes in search. Google have had it too long. Google now means to search just as Hoover came to mean vacuuming. But will this collaboration be Google’s Dyson?
More comments from jbradderAs mentioned earlier, hope we don’t lose siteexplorer…..
More comments from SmartParkThanks for the info and for sharing the resourceful info with us.
Google will be that easy to topple from its current position. Yahoo and Microsoft collaboration will not make a significant change over the existing trend of Google Fever’. Believe me!. From Vacant Home Staging
Are Microsoft and Yahoo strong enough together to challenge Google’s overwhelming market share?
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