Microsoft, Yahoo, Mergers, and You!

It has been a few weeks since the Yahoo/Microsoft deal was announced. There are definitely a lot of ins and outs to the deal, and hopefully this will help you understand how it will affect your business. You can also find out more about the deal (as we did) here at

· Yahoo is leasing Microsoft’s search engine technology. Basically, Yahoo search will now be powered by MSN/Bing’s backend technology. From a user interface standpoint, nothing is going to change. However, significant changes will be made to the search engine optimization evaluation and Paid Search sides of both companies.

· This deal reflects how both Yahoo and Microsoft wish to position themselves.

1. Microsoft wants to position itself as a direct competitor to Google. Stepping up in this way to compete with Google’s search business diverts Google’s attention and dollars away from its Chrome operating system, which Google hopes will compete directly with Microsoft’ Windows platform. By forcing Google to divide its focus, Microsoft keeps its strongest product base (Windows) and also makes inroads into Google’s strongest base (search).

2. Yahoo no longer wishes to concern itself with being a search engine. Carol Bartz, Yahoo’s CEO, suggested that this deal enables Yahoo to develop a healthy revenue stream while Microsoft invests in search technology.  Interestingly, Yahoo wishes to be a portal-style site where people go to get mail, horoscopes, etc., and will make money off their display advertising network, which is fast becoming the strongest on the internet.

· Paid search technology will also be run by Microsoft. However, all Microsoft will do is provide paid listings. User interface type improvements, like Yahoo’s Search Assist feature, are up to Yahoo to provide. Basically, MSN will deliver the paid listings, then Yahoo can dress them up however they like. All larger advertisers (like Leverage Marketing) will work through Yahoo’s back-end User Interface and have a concierge team (like our Yahoo Agency Team) helping them out. Smaller advertisers, no matter which site they are advertising on, will use MSN AdCenter.

· None of this will take effect for at least a year. This is probably the most important point for advertisers wondering how this will affect them. Yahoo will not begin using MSN tech until late 2010 at the earliest, and their paid ads won’t be run by MSN tech until 2011 some time.

To stay up to date on the latest happenings – think about setting up a Google Alert so you can get all the latest breaking news as it relates to your business.

– John Veron