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Yahoo and Microsoft versus Google: War of the Infotech Greats

Written By David D'Angelo on Monday, August 3, 2009 | 8/03/2009


The long courting is over, Yahoo had finally agreed to engage and marry Microsoft in a Search Partnership deal. The new partnership announced July 29 is aimed at fighting the emerging Infotech giant, Google, Inc. who has recently announced that they are now ready to release their own Operating System (OS), the Chrome OS.

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.

We will also be seeing a new search engine in the days to come, as Misrosoft unveils 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.

But will it be just that simple? Google also owns tons of other sites which includes Blogger.com, one of the leading blogging platform; they also own YouTube which is the biggest video directtory; plus Google's Adsense is by far the most used advertising platform online.

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 $200 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.

By that time, Google might at the same time be very well running ahead. Let us just wait and expect a better World Wide Web.

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