Should Yahoo & Microsoft End Their Search Alliance?

The question of whether or not Yahoo and Microsoft will remain search partners is up in the air. The two companies have a decision to reach within the next month or so. In one scenario, the two compan...
Should Yahoo & Microsoft End Their Search Alliance?
Written by Chris Crum
  • The question of whether or not Yahoo and Microsoft will remain search partners is up in the air. The two companies have a decision to reach within the next month or so. In one scenario, the two companies could part ways. In another, they could agree to extend the existing relationship. In yet another, they could continue as partners, but under revised terms. Some are even contemplating if Yahoo will end up partnering with Google.

    Which of these scenarios would you like to see? Do you think the partnership should continue as is? Should Yahoo partner with Google? Tell us what you think.

    Based on an SEC filing, Reuters reports that Yahoo and Microsoft agreed to extend a deadline to reach an agreement by 60 days after February 23. The report says:

    It was not immediately clear if the extension signaled progress or lack of consensus between Yahoo CEO Marissa Mayer and Microsoft CEO Satya Nadella. The announcement to extend the talks comes a few days after Nadella’s mother passed away in Hyderabad, India, according to a report in The Economic Times.

    While Microsoft isn’t saying anything, the report also shares this statement from Yahoo: “We value our partnership with Microsoft and continue discussions about plans for the future. We have nothing further to announce at this time.”

    But how much does Yahoo value that partnership? We’re talking about a partnership put together by these two companies while both were under different leadership (Carol Bartz at Yahoo and Steve Ballmer at Microsoft), and current Yahoo CEO (a former Googler) Marissa Mayer has criticized it in the past. In fact, according to some she absolutely hates the deal. Kara Swisher, who probably has better connections within Yahoo than anybody, shared this last year:

    Added the source, in a sentiment I have heard from many inside Yahoo who have spoken to her: “The minute Marissa finds a way out of that deal without committing suicide, she will. She hates it.”

    Swisher’s report was actually about Mayer’s “big push to return the company to the search business,” which said she was trying to “move Yahoo squarely into competition with both Google and Microsoft in an attempt to regain control over one of its key revenue streams.”

    “To do so, she has ordered up two under-the-radar initiatives that could potentially move the company into algorithmic search, as well as search advertising, again,” Swisher wrote.

    Mayer had been expressing her disappointment with the Microsoft deal long before that report, even in public settings. And that was after Google executive chairman Eric Schmidt reportedly said Google would “love to be a search partner for Yahoo.” Not long after that, the two partnered on contextual advertising.

    Keep in mind, Yahoo and Google tried to partner on search before Yahoo’s deal with Microsoft came to fruition. It never happened because of the threat of regulation, which led to Yahoo settling for Bing. Since then, Google has cleared some significant regulatory hurdles.

    A lot has happened since all of that though. For one, Yahoo was able to wrangle Firefox away from Google in the U.S. As of late last year, Yahoo is now the default search experience in Mozilla’s web browser. In November, Yahoo and Mozilla entered a partnership that made Yahoo the default search experience on Firefox, replacing Google, which had held the spot for the past decade. The deal showed some great early results for Yahoo in terms of search market share.

    Earlier this month, StatCounter release data indicating Yahoo was largely able to hang on to the initial gains it made in the search market, but that growth has pretty much come to a stop. The numbers for February were as follows: Google 74.9%, Bing 2.5%, and Yahoo 10.7%. That’s U.S. search share.

    Yahoo’s slowed growth hasn’t kept Google from more aggressively trying to get Firefox users to switch back to its search experience. They’ve actually been showing big ad-like messages at the top of unrelated search results pages:

    If you click “learn how,” you’re presented with this:

    This approach has been referred to as “begging” and “desperate” on Google’s part.

    Google is no doubt even more concerned about the possibility of losing Apple’s Safari browser too. All three of the big search engines want that, and Google’s deal with Apple should be expiring pretty soon. We’ve already seen Apple try to distance itself from Google in other ways.

    Mayer wasn’t shy about wanting Yahoo to power Safari on her company’s earnings call earlier this year:

    The Safari platform is basically one of the premiere search engine in the world, if not the premiere search engine in the world. We are definitely in the search distribution business. I think we stated that really clearly in the past and I think with Mozilla and also in addition we brought Amazon and eBay onboard with smaller distribution partnerships in Q4, we are in search distribution business and anyone who is in that business needs to be interested in the Safari deal.

    The Safari users are among the most engaged and lucrative users in the world and it’s something that we would really like to be able to provide.

    Swisher, who liveblogged the discussion, commented at the time, “Mayer appeared to practically salivate at the prospect if Apple throws over Google for someone else. Issue: Microsoft. Another issue: Yahoo search technology would have to be majorly upgraded.”

    It’s been over a year since Swisher’s report on Yahoo’s internal search plan. We don’t really know how that has progressed over that time. If progress has been major, that will undoubtedly play a role in how Yahoo’s partnership with Microsoft plays out.

    Greg Sterling at Search Engine Land opines, “Despite Mayer’s criticism of the Search Alliance, I would be surprised if the company completely abandoned the deal. Doing so would probably require many millions of dollars of additional investments to recreate what existed before Yahoo turned search over to Microsoft. Yahoo’s institutional investors would also probably balk at the move.”

    In the end, we’re just going to have to wait and see what happens.

    What would you like to see happen with all of this? Let us know in the comments.

    Image via Wikimedia Commons

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