A search and advertising deal announced recently means Yahoo’s once-dominant search engine will grind to a halt for 10 years, replaced by Microsoft’s often-revamped and newly branded Bing.
Yahoo gets a big slice of text ad revenue, and Microsoft buys itself into a (distant) second place in the search race, still with less than half the searches as Google.
The only real change for Yahoo’s millions of users is they’ll likely see some Bing branding and search results that might feel slightly different.
Microsoft is set to get a huge bump in traffic to its revamped search engine and online text ad platform. Bing, which currently handles about 8 to 10 percent of U.S. searches, will jump to something in the neighborhood of 30 percent. And by capturing one opposing army, they dramatically simplify the battle lines and create a two-sided conflict.
Google remains the dominant force: It controls 70 percent of the search market and is a cash cow. It collected more than $5.5 billion in revenue in the last three months alone — 30 percent more than Yahoo grossed all last year — the majority from text ads laid next to search results.
By contrast, Microsoft has consistently lost millions refining and trying to monetize its search, and its efforts to catch up with Google in online advertising dollars have stagnated despite billion-dollar acquisitions. With the Yahoo deal, Microsoft is clearly hoping to steal some of the billions that Google makes — using the contractual access to Yahoo search technology (which it gets exclusively under the deal) and more importantly, from the sheer volume of traffic that flows through Yahoo every day.
The deal won’t be finished until federal regulators in the States and the E.U. look over the deal, but they are unlikely to stomp on it, given Google’s monstrous market share. That means Bing will be the new Yahoo search early next year.