Microsoft Bing Will Power Yahoo! Search
Based on the agreement between Microsoft and Yahoo!, Bing will power the Yahoo! Search for at least the next ten years. The terms of agreement specify that 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. According to comScore, this partnership between Microsoft and Yahoo! will determine the apparition of a new serious competitor for Google, even the Google Search giant still dominate 65% of the Internet search engines market.
“Providing a viable alternative to advertisers, this deal will combine Yahoo! and Microsoft search marketplaces so that advertisers no longer have to rely on one company that dominates more than 70 percent of all search. With the addition of Yahoo!’s search volume, Microsoft will achieve the size and scale required to unleash competition and innovation in the market, for consumers as well as advertisers.”
Yahoo! Chief Executive Officer Carol Bartz explained that the agreement between Microsoft and Yahoo! will determine more benefits for Internet users, advertisers and content publishers:”This agreement comes with boatloads of value for Yahoo!, our users, and the industry. Users will continue to experience search as a vital part of their Yahoo! experiences and will enjoy increased innovation thanks to the scale and resources this deal provides. Advertisers will also benefit from scale and enjoy greater ease of use and efficiencies working with a single platform and sales team for premium advertisers. Finally, this deal will help us increase our investments in priority areas in winning audience properties, display advertising capabilities and mobile experiences.”
In the same time, Microsoft will have an increased market share with both advertisers and consumers. 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.
The display of advertisements will not be influenced by this Microsoft-Yahoo! Deal, because both companies will maintain their advertising programs separately. Therefore, Yahoo! will continue to syndicate its existing search affiliate partnerships, while 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.
By this agreement, Yahoo could not be yet considered out from the search engine market, it just share Bing with Microsoft:
“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.”
It is hard to appreciate how Yahoo!-Microsoft partnership will influence the search engine market in the next ten years. Google still own a strategical position on the current search engines market and in the future, it could also perform better.
What do you think about the new Yahoo!-Microsoft partnership? Will be a benefit for the search engines market? Tell us in comments.
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