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Could little search engine, owned by IAC/Interactive (NASDAQ:IACI), help topple giant Google (NASDAQ:GOOG)?

According to David Kirkpatrick, a Fortune Editor, could play a huge role in helping Yahoo! (NASDAQ:YHOO) and other search engines catch up to Google's dominance.

According to the latest statistics Google commands a healthy lead in online search volume, currently at over 50% of all searches. Yahoo! is the closest at above 20%, while MSN of Microsoft (NASDAQ:MSFT) sees only about 9% of internet search volume.

The importance of search engine traffic, of course, is that advertisers need to sell to as many people as possible, and Google thus carries the largest number of advertisers.

So how do the smaller engines catch up?

Mr.Kirkpatrick makes a bold suggestion: MSN somehow joins forces with Yahoo!, possibly through a Microsoft buyout of Yahoo!, to help erase Google's big lead.

Assuming that Microsoft does buy Yahoo!, even though such a deal would shake Wall Street like an earthquake similar to the Time Warner (NYSE:TWX) and AOL deal, the combined entity would still only host just over 30% of searches.
The Little Engine
While that figure is respectable, it still does not come close to Google's search volume, and this alone would mean advertisers would still rather seek Google as a host.

Enter, the little "swing state" as IAC/Interactive CEO put it. While only attracts about 2% of all searches, it also operates Excite and iWon and receives traffic through Lycos and Infospace. The combined search traffic would equal to about 10% of all searches.

A Yahoo!/MSN would love to get its hands on that 10%.

Another important point is that currently has a deal with Google where the giant search engine places its ads through's network of sites. The deal expires at end of 2007.

Do I hear a fight? will be wined and dined by the big players in an attempt to win their next deal.

All of this talk and analysis seems interesting, but how likely is it to happen? As I understand it, Mr.Kirkpatrick suggests that to topple Google two major events must happen: Microsoft would have to merge with Yahoo!, and would have to say no to Google at the end of their contract, and sign on with the newly formed MSN/Yahoo! entity.

I don't think any of the above is likely to happen any time soon. might play hard to get with Google, but only to get a better deal. knows very well that leaving Google would be analogous to business suicide for a very simple reason-- Google is now an internet icon all over the world, and no new entity, no matter how large, could topple that image. will re-sign with Google.

As for a Microsoft merger with Yahoo!, it's is an interesting thought, and could make sense from Microsoft's perspective. But for Yahoo!, what could it gain from such a deal?

Source: The Little Search Engine That Could (Topple Google?)