microsoft/yahoo takes on google

Microsoft, Yahoo can now focus on common enemy: Google
February 19, 2010 - 12:19PM

US and European regulators have cleared the long-discussed internet search partnership between Microsoft and Yahoo, enabling the rivals to form a tag team as they try to mount a more serious challenge to Google.

The government approvals announced overnight anointed an alliance that Microsoft and Yahoo proposed nearly seven months ago after years of flirtation and often contentious negotiations.

Microsoft first approached Yahoo about working together in late 2006 and again in 2007. In 2008, Microsoft launched a hostile bid to buy Yahoo in its entirety, only to withdraw the $US47.5 billion ($52.7 billion) offer in exasperation.

Yahoo now plans to rely on Microsofts search technology in an attempt to boost its sagging profits. Yahoos stock has been slumping since Microsoft took away its last offer of $US33 per share in May 2008. The stock ended up 10 cents at $US15.54 on Thursday.

Microsoft is counting on the 10-year deal with Yahoo to provide more muscle as it tries to counter Googles domination of the lucrative internet search market. The companies make money by charging advertisers to pay to have their links appear when people search for certain terms.

While gaining access to Yahoos internet search audience and advertisers is bound to help, it could still prove to be too little, too late.

The US Department of Justice and European Commission had no problems with Microsoft and Yahoo working together largely because Google is so far ahead of them in the lucrative internet search market.

Allowing Microsoft and Yahoo to join forces should spur greater competitive pressures in the marketplace, the Justice Department predicted in a statement.

Google processes two-thirds of the worlds search requests, followed by Yahoo with 7.4 per cent, Chinas Baidu.com at 7 per cent and Microsoft at just 3.2 per cent, according to internet research firm comScore Inc.

Microsoft has been making some minor strides in the United States since it overhauled its search engine and renamed it Bing last summer. But the progress has primarily come at Yahoos expence.

Its going to take a while before all the pieces of the complex Microsoft-Yahoo deal will be in place. The companies hope Microsofts technology will be ready to start processing search requests that people enter on Yahoos US site by the end of this year. But getting everything ready around the rest of the world is expected to take until 2012.


http://www.smh.com.au/business/microsoft-yahoo-can-now-focus-on-common-enemy-google-20100219-okoa.html