Posted July 17, 2009 8:01 am by with 6 comments

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Simpson HandshakePlease, please, please be warned: While there is talk of Yahoo and Microsoft getting close to coming to terms on a search ad deal this is not a done deal. People in the Internet space love to see some information then make a few assumptions and then turn it into a reality. Over at All Things Digital Kara Swisher is reporting on the goings on with this deal and there is plenty of cautionary talk about the deal despite it being close to done.

The most recent talks have been unusually close to the vest at both companies, and spokespeople for both Yahoo (YHOO) and Microsoft (MSFT) declined to comment on the issue.

And, of course, they should not, since there is no certainty any deal will be struck at all, especially since the pair have been down this road before, unsuccessfully.

In those cases, both sides have thought they were close, too, with fingers quickly pointing at each other for the failure of the discussions.

Apparently there are plenty of variations on the same theme for this deal but the consistent note struck is that Microsoft will take over the search ad business of Yahoo with an upfront payment in the billions of dollars and some ongoing pay arrangements.

There is no doubt that something needs to happen to further shake up the search industry. Microsoft’s bing has created some buzz for sure but the impact early on is not huge and the long term success in the search space will need some, well, time to tell.

So how does this deal help each side?

The possible pluses are clear: Huge technology cost-savings and cash for Yahoo and another weapon to fight archrival Google for Microsoft.

It needs as much firepower as it can get. A recent comScore (SCOR) report for June showed Google with a 65 percent share, Yahoo at 19.5 percent and Microsoft at just 8.4 percent.

The deal, if struck, could give a big boost to shares of both companies, which have been up a lot since the beginning of the year.

So since the details are thin at this point we’ll leave the speculation to those who like that. If this deal were to happen it certainly would be a change. If it ends up denting Google’s search dominance will only show in performance and not conjecture. Honestly, while it may be interesting to have Microsoft and Yahoo working their search ad business in some form of a union it will only matter if advertisers believe that their money would be better spent there or with Google. That’s a tough hurdle to overcome no matter how you approach it.

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  • Well Microsoft really wants to be own yahoo… the moment the combined threat to both is google. This has to happen 🙂

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  • Let us see what will come. Google needs some competition.

  • Ross Bradley

    Your thoughts on the matter came down to that with a union it will only matter if advertisers believe that their money would be better spent there or with Google. Thats a tough hurdle to overcome no matter how you approach it.

    Have you not heard of a newer, much more fairer (and more reasonably priced) means for an advertiser alternative, to that of an overpriced Google?

    A ‘live’ (Global) OPEN Marketplace that’s RTB auction based (at both ends), whereby quality publishers with quality content will be highly sought after by advertisers. All bidding for placements on a much more ‘healthier’ basis than that, as has been offered by Google for so long now.

    And a marketplace of gloabl scale, where …”a person in Beijing is reading the Times online in London, they should see an advertisement relevant to them locally, not a world away”, said Dr Mathew McDougall, Group CEO and Executive Chairman of SinoTech Group.


  • Google is now the colossus for searches. Microsoft and Yahoo together have perhaps more opportunity to compete and open the market!
    see what happens! 😉

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