on July 26, MSN and Yahoo announced a 10-year deal where they will partner to compete more aggressively against Google. The exact details of the partnership have not yet been hammered out, but tentative roles have been announced.
Based on the announcement, MSN’s new Bing.com search engine platform will power both MSN and Yahoo search sites. Bing has been slowly taking market share away from Google with their new and innovative search technology. Yahoo is supposed to take over the management of the premium advertisers for both companies.
Under the agreement, Yahoo will keep 88% of the search revenue during the first 5 years. The deal appears to be mostly a cost savings for Yahoo. Yahoo expects to boost their annual operating income by $500 million, but does not anticipate a boost in revenue. At least 400 current Yahoo employees will become Microsoft employees as part of the deal.
Both companies will be using Microsoft’s AdCenter tools for their pay-per-click (PPC) advertising programs. Let’s hope that Microsoft fixes some of the bugs in their AdCenter PPC system. We run PPC ads using Google Yahoo and MSN. MSN has been the most difficult system to work with, because it does not always work as expected.
Given their long history of competing against each other, it will be interesting to see if they each openly share their proprietary technologies. At this point, MSN probably has more to lose by revealing their Bing technology to Yahoo. The deal could still fall apart at any point.
Outside of search technology and PPC advertising, none of the other operations run by each company is part of the deal.
Both companies expect it to take about two years to work out the technical and business relationship details with the new partnership. In Internet years, that might as well be a hundred. Things move fast on the Web and the Internet world can change significantly in two years.
