MICROSOFT HITS BACK AT GOOGLE
SOFTWARE giant Microsoft yesterday sealed a global search advertising deal with internet giant Yahoo, ending a 19-month courtship and launching its next assault on Google’s market dominance.
Under the freshly-drafted 10-year agreement, Microsoft’s Bing search engine – launched in June – will power search queries on Yahoo’s sites, while Yahoo will provide the search-advertising sales force for both sites.
“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 Microsoft chief executive Steve Ballmer, in a jibe directed at Google, which holds nearly 70 per cent of the global search market share.
The marriage between Microsoft and Yahoo will propel Bing, which currently holds three per cent of the global market, to the second-largest search engine, with 12 per cent global search share.
But analysts were doubtful that the tie-up could unsettle Google’s hold, particularly in western Europe, where its share is closer to 90 per cent.
“A deal may shake up the industry in the US but as for the UK, it would probably have little or no impact at all – at least not in the short term,” said Warren Cowan, chief executive of search marketing agency Greenlight.
The partnership is forecast to generate income of $500m (£305m) a year for Yahoo – which will keep 88 per cent of revenue generated on its sites over the first five years – and $200m in capital expenditure savings.
The deal had been widely expected to include a one-off payment of $1bn – $2bn to Yahoo, suggesting Microsoft had the upper hand in negotiations. But Yahoo chief executive Carol Bartz said that the agreement “comes with boatloads of value”.
The long-awaited partnership – expected since Microsoft’s botched attempt to buy Yahoo for $45bn last January – should close in early 2010, subject to regulatory approvals.