Microsoft and Yahoo Agree To 10-Year Search Deal, Should Google Be Scared?

Microsoft and Yahoo have finally come together, not in a acquisition but in a Search Deal. The deal will allow Microsoft to power Yahoo search, while Yahoo becomes the exclusive sales department for both companies’ online advertising. What does this mean for both companies and how does it benefit each of them?

The deal is for 10 years and in that span, Microsoft Bing will become the algorithm search for Yahoo sites. Yahoo will also allow Microsoft to use their existing technologies to make a better web platform. Here’s a few more bits and peices:

-Companies will still have their own advertising sales force.

- Microsoft will pay Yahoo through a revenue sharing agreement based on traffic generated by Yahoo’s owned and partner sites.

- Yahoo will still have control over their partner sites and continue to use their content in searches.

While reading through the press release (below), I couldn’t help but wonder how this will effect the average consumer. It’s really not. For most of us this will just be another big news and we’ll move on but this could end up being a big blow to Google. Bing search engine has proven to be popular with many agreeing it’s much better than Microsoft’s last offering, Live Search. With this Search partnership, Bing can continue to climb through the ranks and won’t be directly competing with Yahoo any more but rather the number one search engine in the world, Google.

As good as Yahoo in many countries overseas, adding Microsoft Bing will raise the profiles of both search engines. It won’t make an impact right away, but we’ll have to give it a few months to see how much this affects Google, if it does at all.

Here’s the full press release:

Microsoft, Yahoo! Change Search Landscape
Global Deal Creates Better Choice for Consumers and Advertisers

SUNNYVALE, CA and REDMOND, WA — 29 July, 2009 — Yahoo! and Microsoft announced an agreement that will improve the Web search experience for users and advertisers, and deliver sustained innovation to the industry. In simple terms, Microsoft will now power Yahoo! search while Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers.

For Web users and advertisers, this deal will accelerate the pace and breadth of innovation by combining both companies’ complementary strengths and search platforms into a market competitor with the scale to fuel sustained development in search and search advertising. Users will find what they care about faster and with more personal relevance. Microsoft’s competitive search platforms will lead to more value for advertisers, better results for web publishers, and increased innovation and efficiency across the Internet.
Under this agreement, Yahoo! will focus on its core business of providing consumers with great experiences with the world’s favorite online destinations and Web products.

“This agreement comes with boatloads of value for Yahoo!, our users, and the industry. And I believe it establishes the foundation for a new era of Internet innovation and development,” said Yahoo! CEO Carol Bartz. “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.”

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.
Microsoft CEO Steve Ballmer said the agreement will provide Microsoft’s search engine, Bing, the scale necessary to more effectively compete, attracting more users and advertisers, which in turn will lead to more relevant ads and search results.

“Through this agreement with Yahoo!, we will create more innovation in search, better value for advertisers, and real consumer choice in a market currently dominated by a single company,” said Ballmer. “Success in search requires both innovation and scale. With our new Bing search platform, we’ve created breakthrough innovation and features. This agreement with Yahoo! will provide the scale we need to deliver even more rapid advances in relevancy and usefulness. Microsoft and Yahoo! know there’s so much more that search could be. This agreement gives us the scale and resources to create the future of search.”

“This deal fits the long-term strategic direction of Yahoo! to remain the world’s leading online media company and Carol Bartz has the full and unanimous support of the Yahoo! Board behind this deal,” said Roy Bostock, chairman, Yahoo! Inc. “This is a significant opportunity for us. Microsoft is an industry innovator in search, and it is a great opportunity for us to focus our investments in other areas critical to our future.”