If Yahoo Adopts Microsoft's Bing for Search, What Value Will It Still Have?

Yahoo (YHOO) and Microsoft (MSFT) are very close — a year and a half after Microsoft went public with its buyout offer for the beleaguered web giant — to inking a search deal. AdAge’s Michael Learmonth reports that an agreement is likely to be announced this week, and would solidify Bing’s No. 2 position behind Google (GOOG). The deal, as it’s understood now, would allow Yahoo to dump its OK-but-not-great search engine in favor of Bing’s, saving on infrastructure and R&D costs. Searches on Yahoo.com would remain Yahoo branded (though perhaps with a “powered by Bing” notation).

So if this goes through, what's left of Yahoo? What's their key advantage except simply milking what's left of their past popularity? They become a portal site with email, and a nice finance site. But to me, they are slowly moving down the value chain if indeed they decide to use Bing instead of their own search. If this happens, to me it proves the failure of Yahoo's strategy over the last years. All the money they wasted on sideline portal ideas, they should have been plowing into search innovation. Clearly it matters, search isn't such just a commodity, if in the end they need to use Bing.

Comments

[Zieb:]

Your assessment is correct only if you think 1) Yahoo is still a search company and 2) they will have no revenue spliting with Microsoft.

It is almost certain Microsoft and Yahoo will split revenue from search for some time to come (at least until Microsoft doesn't need Yahoo anymore, which might be never), and who knows what Yahoo will do with that money added to the cost savings of not maintaining search. What they will certainly do with much of it is do what they should have been doing all along: put it toward being a media company. They have massive, desireable, useful online assets, and most people think they are just search. The don't just have a nice finance site and email. They also have a solid music site (now that they have started to figure out what to do with it), video hosting, a great RSS system, and popular webbrands, like Flickr and Delicious. Anyone in the business of the internet would absolutely sell their soul for that huge a network of valuable properties, and that's not scratching the surface of what they offer if you start using all their services together.

The problem is people think they're a TV Guide (like Google). They're not. They're one of the networks.

Jul 28 07:52 AM

[doodoo:]

Well I for one wish MSFT would have nothing to do with any part of Yahoo.Since Ballmer made his idiot bid of $43b for Yahoo their stock price has been in freefall.No one except Yahoo stockholders seems to be in favor of a MSFT hookup.Ballmer in his idiot fashion keeps pushing for some kind of unity with Yahoo and I wish MSFT board would get rid of Ballmer and turn MSFT in a different direction.

Jul 28 11:41 AM

[jack dee:]

A deal that splits revenue would be great for both companies.
MSFT needs market share, Yahoo needs cashflow and to cut costs.


with 30% of the market MSFT would have the scale needed, all they would have to do is hold market share to make a profit.

Jul 28 12:11 PM

[Vincent Fer...:]

Yes Yahoo is now just a media company. But what I am saying is that this is a step down from being a online tech-innovator. It is a sign of defeat. Sure it makes business sense, they will consolidate what they have left. But there are tons of media companies online. Far fewer with their own web technology competitive advantage like Google or at one time Yahoo.

Jul 28 10:51 PM

[AdamC:]

The end of Yahoo not as we know it but the real end.

So those who own Yahoo shares, it is the best time to sell, why, because Bing belongs to you know who. And can Yahoo rely on the bunch of free apps? Your guess is as good as mine.

Jul 28 11:58 PM

[billddrummer:]

Let's hope Bing works better than YHOO's existing search engine.

It stinks. Particularly in comparison to GOOG.

Whenever I'm defaulted to the YHOO search engine, I switch to GOOG.

There are probably millions who do the same thing.

Jul 29 02:44 AM

[holmesnmanny:]

Myself, and everyone I know have yahoo as their homepage. I have never once used Google to do a search. NEVER. You go to Googles homepage and it's just a search box. I use yahoo for my fantasy sports that I do year-round and of which I contribute 9.95 each sport each season for live stats. I don't use Google for anything. Yahoo news is great, their finance is great. I don't really understand all the hoopla around Google.


On Jul 29 02:44 AM billddrummer wrote:

> Let's hope Bing works better than YHOO's existing search engine.
>
>
> It stinks. Particularly in comparison to GOOG.
>
> Whenever I'm defaulted to the YHOO search engine, I switch to GOOG.
>
>
> There are probably millions who do the same thing.

Jul 29 08:59 AM

[ddadm09:]

Wow! Finally Microsoft has reached a deal Yahoo for an internet search partnership. Will the newly announced deal between giants Microsoft and Yahoo be a good thing? Got to wait and see. But atleast Microsoft and Yahoo deal is straightforward and not complex at all and ofcourse, the negotiation talks have been going for long. I was just curious to know all the past negotiations between Microsoft and Yahoo so collected all the articles and links (more than 200) related to the current merger and the previous events or negotiations between Microsoft and Yahoo. If you are interested check the link below.
markthispage.blogspot....

Jul 29 09:22 AM