News about our Search Alliance with Microsoft
Today we issued a press release announcing that we've received clearance from both the U.S. Department of Justice and the European Commission for our search agreement with Microsoft. Now that we're full steam ahead, I'd like to share what we at Yahoo! …
Context & Ripple Effects
The regulatory wait is over. The deal Yahoo and Microsoft finalized in December 2009 has now cleared both antitrust gates — the U.S. Department of Justice and the European Commission — removing the last formal obstacle between signing and execution. The arc runs back to July 2009, when Carol Bartz's negotiating position was reported as down to the short strokes, through the signed agreement that locked the ten-year revenue-share terms.
Clearance matters because the alliance is operational, not financial: Yahoo hands its organic crawling and indexing to Microsoft's Bing while selling premium ads itself, with Microsoft's adCenter handling the rest. Both regulators signed off without demanding structural changes, which the companies will read as validation of the deal's design.
First-order effects
- Yahoo and Microsoft can now begin the technical transition of Yahoo search to Bing and migrate advertisers to a combined platform, ending months of limbo for publishers and SEM firms whose campaigns straddle both networks.
- Yahoo's search team shifts from running an index to optimizing a partner's results plus its own premium ad layer — an immediate change in what the roughly two thousand engineers tied to search work on.
Second-order effects
- Google now faces a consolidated number-two: combined Yahoo-Microsoft query volume and a single ad platform lower the fragmentation cost that has kept mid-size advertisers on Google alone, pressuring Google to defend agency relationships and pricing.
- Third-party search tools, rank trackers, and SEO vendors must rebuild around two indexes instead of three, since Yahoo-served results become Bing results in most markets.
Third-order effects
- If the transition holds, web search structurally becomes a two-supplier market — Google versus a Microsoft-powered everything-else — shrinking the space where independent search engines compete on their own crawl and index.
- Regulators on both sides of the Atlantic have effectively blessed scale-through-partnership as the answer to Google's dominance, setting a template other challenged challengers may follow rather than building competing infrastructure.
The trend: Paid and organic search are consolidating around a Google-versus-Microsoft duopoly, with Yahoo trading independent infrastructure for a revenue share inside the challenger bloc.