Wednesday, July 29, 2009

Microsoft-Yahoo Search Deal

Yahoo signs an important search deal with Microsoft. An agreement for the next 10 years. Yahoo will continue to search throughout the existing content and properties but the technology behind the search will be powered by Microsoft - The BING - Yahoo will be the exclusive sales force for both companies premium search advertisers with Microsoft investing in the search technology.

I don't need to say that technically this deal was profitable for Microsoft. Who wont love to move from the 3rd position in the world to 2nd position, still keeping their technology as the foundation for all future development.

With this deal Yahoo is betting into the future. Yahoo finds this necessary for both companies to scale and compete against the online search and Advertising giant GOOGLE. The companies will invest couple of 100 millions for the successful transformation. Yahoo expects the users, advertisers and publishers will benefit from this deal.

For any one who is eager to know the impacts of this deal on the search as well as on the related services offered by both companies following are the expectations from the CEOs of both companies
  1. Users are expected to have the same privacy and capability as before on all the existing services
  2. The developers from both companies are expected to have the same ability of innovation
  3. There will be decisions made on what apis will be equal and open to share technology etc. in web and mobile space
  4. The companies expect to see a lot of innovation in the areas of technology innovation, for example better algorithms for relevance of content in the area of UI innovation.
  5. They expect to see innovations in areas other than technology. For example with combined marketing of Ads, both will get to see more information for business intelligence, on what customers need, what customers use most etc

As per the stated plan an execution team will be formed, with members from Yahoo and Microsoft. The team is expected to have mostly members of sales team from Yahoo and members of technology team from Microsoft.

Microsoft says the foundation platform for the joint search engine (search and advertising) will be Bing. Obviously this is a big win for Bing. What is more interesting is that as part of the agreement announced Microsoft will acquire rights for Yahoo's search engine technology for the next 10 years. This also mean

  • As part of all these some engineers from Yahoo may move to Microsoft. We might see the YUI and Hadoop technologies powering the decision engine along with AdCenter advertising sales technology.
  • Some developers of Yahoo search department might get moved to some other areas of development
  • Since there is some redundancy as part of this, some developers might be asked to go :(

Since Ballmer stated that introduction of Bing in Yahoo will be more of an integration than instead of a replace of search technology in Yahoo, the chances of third option (Yahoo layoff)may be minimal as lot of new opportunities always come into limelight due to the integration process at least for an initial duration. Especially when all these processes will take it into 2010.

Its is expected that with the vast amount of content that Yahoo possess over the last decade, Bing is going to benefit in term of its relevance in the search result. How much of this improvement will be and how much of that will take away the share of advertising market from Google to Microsoft/Yahoo will depend really on the technology capability of Bing as well as on the sales capabilities of Y! :)

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