Yahoo and Microsoft Search Partnership is Close - Deal or no Deal?
All Things D and 24/7 Wall St. report that Yahoo and Microsoft are in talks about a search partnership, and that the deal is very close on the horizon:
- Sources at a major client of investment house ThinkEquity say that the firm considers a Microsoft (MSFT) link-up with Yahoo! (YHOO) in the search business to be “imminent”.
- Sources beyond ThinkEquity speculate that under the terms of the arrangement, Yahoo! will be paid $3 billion upfront and will get 11o% of the revenue that its searches provide after traffic acquisition costs in each of the first two years. In the third year, that figure would go to 90%.
- …one person close to the situation, “It is down to the short strokes, for sure, it is just a question if we can finally close this.”
Microsoft Bing Search Share
Comscore stats for June 2009 put Bing at 8.4% which is a 0.4% increase from May.
| Google Sites | 65.0% |
| Yahoo! Sites | 19.6% |
| Microsoft Sites | 8.4% |
| Ask Network | 3.9% |
| AOL LLC | 3.1% |
The $100 million advertising campaign has won Bing some points, but so far failed to create significant gains. Speculation is that Bing might lose its gains once the marketing budget runs out.
Yahoo - Microsoft Deal
Having launched Bing, which so far got positive reviews, Microsoft is much more confident about the product. If the partnership goes through, Microsoft will leap frog to 30% search share, which will put in a much better position against rival Google at 65%.
From the rumors of the search deal it is clear that Microsoft is making a strategic long term investment, which will take years to recoup, while Yahoo might be getting its long awaited “boat loads of cash” as CEO Bartz requested from Balmer.
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