Microhoo Searches for Light at the End of the Tunnel
Last week it was speculated that the Microsoft/Yahoo search deal, a agreement that would see Yahoo sell its search ads through Microsoft’s new Bing brand, could be facing some significant delays. On October 27th, the two internet giants were supposed to have concluded all negotiations. However, a filing with the Securities and Exchange Commission shows that these negations are far from finished. The initial deal included many escape clauses for Yahoo based on various performance benchmarks, particularly in regards to performance against Google on the metrics of revenue per search and US market share.
In a statement released by Yahoo over the weekend, Yahoo stated:
It would appear then, that this is merely a delay, and not a deal breaker. Regulators are also still assessing the deal, but industry parties such as the American Association of Advertising Agencies have given the deal a solid backing. With the combined market share of Bing and Yahoo experiencing a steady decline in recent months, it is understandable that both parties are exuding cautious diligence towards any deal.
A while back, I assessed the ability of Bing to provide a solid competitor to Google. While it has seemed to drive innovation in search and force Google to work for its dominant market share, Bing has struggled to maintain its initial growth momentum. In turn, it appears that Bing alone cannot be a credible contender to Google’s place on the perch of search. Only a partnership with Yahoo would create a significant alternative for users and advertisers. It could also be that the extra influence given to Bing with an additional 10% US market share would give it enough of a foot hold to claw back even more. In my opinion, Microsoft and Yahoo need to iron out this deal and implement it as soon as possible, before their combined market share falls even further, and before the loses further credibility.
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