its official: Microsoft & Yahoo teamup to kill google?

Discussion in 'DSL & Info Tech News' started by dslmaster, Jul 30, 2009.

  1. dslmaster

    dslmaster Administrator Staff Member

    its official: Microsoft & Yahoo team up to kill google?

    SAN FRANCISCO – Microsoft Corp. has finally roped Yahoo Inc. into an Internet search partnership, capping a convoluted pursuit that dragged on for years and setting the stage for them to make a joint assault against the dominance of Google Inc.

    The 10-year deal announced Wednesday gives Microsoft access to the Internet's second-largest search engine audience, beefing up the software maker's arsenal as it tries to better confront Google, which is by far the leader in online search and advertising.

    Microsoft didn't have to give Yahoo an upfront payment to make it happen, as many Yahoo investors had been counting on ever since Microsoft dangled $1 billion last summer in an attempt to forge a search partnership then.

    Google tried to stop Yahoo from falling into Microsoft's camp. Last year it formed its own proposed search advertising deal with Yahoo, only to be forced to retreat from that alliance after U.S. antitrust officials threatened to sue.

    Now the extended reach Microsoft is gaining will let it introduce its recently upgraded search engine, called Bing, to more people. The Redmond, Wash.-based software maker believes Bing is just as good, if not better, than Google's search engine. Taking over search responsibilities on Yahoo's popular site gives Microsoft a better chance to convert Web surfers who had been using Google by force of habit.

    "Microsoft and Yahoo know there's so much more that search could be," said Microsoft Chief Executive Steve Ballmer. "This agreement gives us the scale and resources to create the future of search."

    Even with Yahoo's help, Microsoft has its work cut out. Combined, Microsoft and Yahoo handle 28 percent of the Internet searches in the United States, well behind Google's 65 percent, according to online measurement firm comScore Inc. Google is even more dominant in the rest of the world, with a global share of 67 percent compared to a combined 11 percent for Microsoft and Yahoo.

    In return for turning the keys to its search engine over to Bing, Yahoo will keep 88 percent of the revenue from all ads that run alongside search requests on its site for the first five years of the deal. Yahoo also will have the right to sell search ads on some Microsoft sites.

    Yahoo estimated the deal will boost its annual operating profit by $500 million and save the Sunnyvale, Calif.-based company about $275 million on annual capital expenditures because it won't have to invest as much in its own search technology. An unspecified number of Yahoo engineers will lose their jobs as the company scales back, Yahoo Chief Executive Carol Bartz told analysts in a Wednesday conference call.

    The deal isn't expected to close until early next year, and then it could take another two years before all the pieces of the partnership are in place. The companies first will give antitrust regulators time to review the possible effects on the Internet ad market. Then they will need time to stitch together their different technologies.

    Shares of Yahoo plunged $2.03, or 12 percent, to $15.19 in early afternoon trading, as investors expressed disappointment over the fact that the company won't be getting an immediate windfall. Microsoft shares edged up 8 cents to $23.55 while Google shares shed $4.44, or 1 percent, to $435.41.

    "I think the market hasn't figured out that there's not much I can do with an upfront payment," Bartz said in a Wednesday interview.

    "It's very clear that (in this deal) I get virtually all my revenue at no cost. That's what's important on an ongoing basis. A one-time upfront payment, what am I going to with it? Collect interest on it every year? That doesn't help me with" Yahoo's finances.

    The alliance could give Yahoo a chance to recoup some of the money it squandered in May 2008, when it turned down a chance to sell the entire company to Microsoft for $47.5 billion. Yahoo's market value currently stands at about $22 billion, and the company, while profitable, is coming off a quarter in which revenue slid 13 percent.

    The two rivals began talking about a possible partnership as far back as 2005 before Microsoft intensified the courtship with last year's attempt to buy Yahoo.

    It took Bartz just six months to strike a deal with Microsoft — something that neither of her predecessors, Terry Semel and Yahoo co-founder Jerry Yang, seemed interested in doing.

    Shortly after her arrival, Bartz made it clear she was willing to farm out Yahoo's search engine for "boatloads of money" as long as she as thought the company would still receive adequate information about its users' interests. Although Yahoo won't get any immediate cash, Bartz predicted the deal will still be a boon for the company.

    "This agreement comes with boatloads of value for Yahoo, our users, and the industry," Bartz said.

    Under the agreement, Yahoo will have limited access to the data on users' searches — which yield insights that can be used to pick out ads more likely to pique a person's interest. The value of that information is why Microsoft wants to process more search requests.

    Like Yahoo, Microsoft has invested billions in its search technology during the past decade, yet remained a distant third in market share while its online losses piled up. The company's Internet services division lost $2.3 billion in the fiscal year ending in June, nearly doubling from the previous year.

    Microsoft is counting on Bing, unveiled last month, to turn things around.

    Bing has been getting mostly positive reviews and picking up slightly more traffic with the help of a $100 million marketing campaign. Analysts believe Bing's successful debut pushed Microsoft to reopen negotiations so it could expose its search engine improvements to a wider audience more quickly.

    "The reason the deal happened now is the recent success of Bing. I think it put pressure on Yahoo, as well as Yahoo not being able to turn it around on its own," said Gartner Inc. analyst Neil MacDonald.

    Microsoft and Yahoo are bracing for scrutiny into whether the combination would have an adverse effect on competition in the online ad market.

    The U.S. Justice Department spent five months dissecting last year's proposed search advertising partnership between Google and Yahoo before concluding that it would give Google too much control over the market. And under the Obama administration, the Justice Department is promising to pore over deals more rigorously than it did when the proposed Google-Yahoo partnership came up.

    Microsoft used its lobbying muscle to spearhead the campaign against Google teaming up with Yahoo, so it wouldn't be a surprise if Google turned the tables.

    "There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users," Google spokesman Adam Kovacevich said. "We're interested to learn more about the deal."

    A key lawmaker on antitrust issues said the Yahoo-Microsoft plan "warrants our careful scrutiny." Sen. Herb Kohl, a Wisconsin Democrat, said the Senate antitrust subcommittee he chairs will review the deal "because of the potentially far-reaching consequences for consumers and advertisers and our concern about dampening the innovation we have come to expect from a competitive high-tech industry."

    Peter Kaplan, a spokesman for the Federal Trade Commission, declined to comment. A Justice Department spokeswoman couldn't immediately be reached.

    Ballmer expects that support from online advertisers and Web publishers who would like a stronger rival to Google will eclipse any objections that Google might raise.

    "We think this is one of these cases where the coming together will produce more effective market competition, not less," he told analysts in Wednesday's conference call.

    Microsoft is doubling down on Internet search at the same time Google is attacking Microsoft's bread-and-butter business of software for personal computers.

    Google is working on a free operating system for inexpensive PCs in a move that could threaten Microsoft's Windows franchise. If it gains traction, Google's alternative, called Chrome OS, could divert revenue from Microsoft while the software maker is trying to grab more money pouring into search advertising.

    Chrome OS isn't supposed to hit the market until the second half of next year. That means Microsoft could get a head start on Google in the duel to steal each other's financial thunder.


    Jessica Mintz reported from Seattle. AP Business Writer Christopher S. Rugaber contributed to this report from Washington.
  2. Unwired

    Unwired Member

    And also Google will enter mobile phone business, probaby powered by Android.
  3. JamesCooper

    JamesCooper Member

    from readng the article, I've noticed the immediate stock market reaction...

    * Shares of Yahoo plunged $2.03, or 12 percent, to $15.19 (in early afternoon trading, as investors expressed disappointment over the fact that the company won't be getting an immediate windfall.)
    * Microsoft shares edged up 8 cents to $23.55 while
    * Google shares shed $4.44, or 1 percent, to $435.41.

    lalong bumagsak ang "shares of Yahoo" ng 12%... samantalang 1% lang ang binaba ng Google... therefore hindi masyado naapektuhan ang Google sa partnership... ewan lang sa pang-matagalan na epekto.
  4. tong2x_

    tong2x_ Member

    sa advertisement yan, since MS at yahoo na masmalaki na ang advertising shares nila at lalaki din yun market nila. unless masmarami ang lumipat sa google
  5. moliro

    moliro Member

    basta search ang usapan... GOOGLE agad ang majority ng pc users... household name na ang google... pati nga si optimus prime sa part1 google din ang ginagamit :))
    pero since MS nagsalita at gagawa ng move, mukhang malaking impact ang tatama sa google... unang una MS has the largest share ng OS market... isama mo pa ang mga pirated na MS din halos lahat... isang critical update kuno lang, well aware na agad ang PC users sa bagong search engine
  6. J3SS3

    J3SS3 Member

    Sa pagkaka-alam ko, nagoffer ang Microsoft na bilhin ang Yahoo! pero hindi pumayag?

    Although ang gagawin ata nila eh, combine sila ng search algorithm.
    kumbaga Partners ba.
  7. tong2x_

    tong2x_ Member

    dati, ngayon mukhang matutuloy na
  8. merks19

    merks19 Member

    kea kaya nila ang google? sa sobrang powerful ng searching ng google ang hirap ng mag tago.. hahaha..

    nag try kasi akong i search ang paangal ko sa google.. ang daming info n lumabas sa akin.. ung lagay n un nag iingat pa akong mag lagay ng details sa net..

  9. Yup yung GPhone then pati yung Chrome OS
  10. jetway

    jetway Member

  11. vanix_09

    vanix_09 Member

    Grabe talaga ang competittion sa market ngayon.
  12. JamesCooper

    JamesCooper Member


    As of July 31, 2009: "wait and see" pa rin ang mga investors... Microsoft, Google and Yahoo... lahat pababa ang presyo sa stock market... ibig sabihin wala masyado epekto ang partnership ng MS and Yahoo.
  13. tagabukid

    tagabukid Member

    Makaka impact talaga to. primarily dahil sa laki ng MS. Remember ko pa dati, yahoo user talaga ako. at that point, yahoo pa ang malaki. upstart pa lang yata ang google. the reason na nagswitch ako ng google, ay dahil sa tie up nila sa firefox.

    if microsoft can get people to use and get used to their search engine. magkakaproblema ang google.

    uu. meron ng android g3 sa smart. although some people still think that the android is quirky and lacking.
  14. mindless

    mindless Member

    The myth about favoritism on links incorporated by their applications' page ranking between the search engine giants would then become true.

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