Microsoft and Yahoo have come to an agreement that will allow Microsoft to compete with Google in a better way by consolidating its market share in search and search advertising. Microsoft will acquire a 10 year license to Yahoo’s search technology and it will power Yahoo Search.
Bing will become Google’s main competitor in search, with a market share of about 28% in the US and about 11% worldwide. After a massive relaunch in May, Microsoft’s search engine didn’t convince many people to switch from Google. Bing’s ranking algorithms have been improved and Microsoft has a lot of interesting specialized search engines including, a great interface for image search and an excellent travel site. But the overall experience does not offer several reasons to use Bing as your main search engine in an extensive manner according to your preferences.
This agreement with Yahoo will create more innovation in search for Microsoft, better value for advertisers and real consumer choice in a market currently dominated by a single firm. The secret to success in search requires both innovation and scale which with the new Bing search platform will create breakthrough innovation and features. This agreement with Yahoo will provide the push needed to deliver even more rapid advances in relevancy and usefulness.
The result of this deal will accentuate Microsoft, which has great technologists and wide network and user base that will have the scale to bring users faster, more useful and more personally relevant search. Competition equals innovation. But with one player dominating 70% of search, that field has been pretty lopsided. This transaction will definitely create a healthy competition that will keep everyone on their toes.
I don’t think scale is the missing ingredient from Bing’s recipe: Google managed to create a search engine that offered great results even when it was just a small project. Google year ending average in 1999 is approximately 7 million searches each day, a roughly 70,000% increase over the 10,000 searches per day that were performed on the Google site in December 1998, according to a newsletter in the year 2000. Microsoft should focus more on innovation by finding new ways to improve search quality and to make the results more useful to the users than trying to create better competition with Google.
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Link
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