Will MS-Yahoo Deal Really Challenge Google?

by Tabrez Khan    Jul 30, 2009

A lot has already been written about how the Yahoo-Microsoft deal will create competition for Google, what the relative strengths are for both MS and Yahoo, and what each stands to gain out of the deal. Analysts being analysts! Perhaps I have joined this debate a little late by contemporary real-time media standards, so I will deliberately focus on some other points that have not been commented upon.

I had pointed out earlier in this column that for Yahoo, being the No. 2 search engine after Google, did not make sense to sell out to Microsoft which was way behind it at the No.3 spot. Yahoo has held its fort and made a strategic deal with Microsoft, rather than going for an outright sale. The deal though is structured such that Microsoft does not have to pay anything upfront to Yahoo, rather there s an agreement for sharing of revenues that are earned out of selling ads on the search engine.

So it seems with good reason that Microsoft has gained more out of this particular deal.
 
Yahoo will have the sales responsibility but if sales don t improve for whatever reasons, is Yahoo s sales force to be blamed or Microsoft s search technology? Analysts say that Microsoft s Bing will add to Yahoo’s search capabilities, does that mean that Yahoo s search engine was inferior?

Advertisers and online publishers are welcoming the move, because they hope Google s hegemony over search engine advertising will end offering them more favorable terms. However, MS-Yahoo cannot hope to ride on this advertiser disillusionment factor alone. They will have to offer an innovative search engine product to lure users and offer a credible alternative to advertisers who will be looking at sizeable number of eyeballs to consider a switch from Google to MS-Yahoo.

User behavior on search engines is a complex thing. Many people may use a search engine such as Google predominantly due to force of habit if for no other differentiating reason. However, since there are only 2 credible alternatives now, users switching from one to the other due to innovative and better product offering is a given. However, what those innovations will be is something hard to visualize at this stage.

I am not an expert on search engine algorithms but a cursory examination of Google and Bing revealed some differences that one could differentiate the two on. Microsoft s Bing does not give news results on its web results page, although it does have an option to search news related to the search topic. Google does, and it can be convenient for a user to see both news and web results on a single page.

Bing on the other hand gives you a summary of each result in a dialog box that opens up when you point at each link so that you need not click on the link to know the gist of what it offers. Bing seems a refreshing change from the plain vanilla Google look if for the sole reason of its novelty right now. But then one has the option of customizing your Google search page from among a number of colorful options so this comparison is moot.

These are minor points, however, and as I said the bing will be in offering a differentiated product and convincing users that these differentiators have resulted in a better search engine.