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 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.
While this may be good news for some, Yahoo’s stock still fell 11 percent, the biggest drop since November, after terms of an Internet-search accord with Microsoft Corp. were less favorable than analysts predicted.
Yahoo shareholders may be upset that the company isn’t receiving an upfront payment from Microsoft, which some analysts had expected to be as much as $3 billion, said Benchmark Co.’s Clayton Moran. Yahoo’s projected cost savings and the portion of revenue it keeps from sales of Web ads both fell short of some predictions, he said.
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.
Jessica Mintz reported from Seattle. AP Business Writer Christopher S. Rugaber contributed to this report from Washington. Read the entire article on HuffingtonPost.com