Will Microsoft Bing Yahoo into search deal?

July 17, 2009

Will Microsoft Bing Yahoo out of search? Now that Bing is chomping away at Yahoo’s market share, the Yahoo might be ready to make a deal. Yahoo Bing anyone?

The two companies have been in on-again off-again talks for over a year now. Dealings have been strained ever since former CEO Jerry Yang publicly rebuffed Microsoft’s overtures, raising the ire of hothead Steve Ballmer.

Yahoo’s new CEO Carol Bartz has also demurred from talks until recently as she was getting Yahoo’s house back in order. So what made Bartz, who trashed Bing as recently as June, decide to come back to the table with legendary rival Microsoft?

This deal seems to be all about the numbers. Bing is the first search engine other than Google to grow market share in recent memory. However, it wasn’t Google’s commanding lead that Bing has started eroding, it’s Yahoo’s.

In May, Bing grew its market share a modest 0.4 percent of all search queries. During the same period, Yahoo lost 0.5 percent of its market share, suggesting that Bing is luring away Yahoo search users.

It didn’t take Carol Bartz long to come back to the negotiating table after seeing these numbers. Now the Yahoo CEO might be trying to close the deal fast before her position erodes even further.

An entourage of high-ranking Micrsofties have reportedly been seen strutting around Yahoo’s Sunnyvale Headquarters. Noticeably absent from the talks this time around is Microsoft CEO Steve Ballmer.

The rumor is that Yahoo may be willing to replace its search engine with Bing. Microsoft would then pay Yahoo billions of dollars up front with regular guaranteed payments to follow.

In this case, the speed of the deal could be to either side’s detriment. In coming months Yahoo’s search share could erode further or it could turn out that Bing’s initial growth was a fluke, but neither side is waiting to see how it turns out.

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One Response to “Will Microsoft Bing Yahoo into search deal?”

  1. unlimited:

    As advertisers we like adcenter for the great conversion rates of Bing’s traffic.. With Yahoo though we are forced to buy clicks from junk partners that send nothing but fake clicks.. It’s a daily job to monitor all the new bad-domains to block.. And you have to PAY for all that.. :P

    With the current merge of Yahoo and Bing let’s hope the new “team” will do it RIGHT by giving the advertisers the choice to pay only for real yahoo/bing searches.. just like Adwords and adcenter allow (for now?).

    Just my 2 cents

    Cheers!

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