Yahoo!, Microsoft Concede Search War

Includes: AABA, GOOG, MSFT
by: Ashkan Karbasfrooshan

I think Yahoo! (YHOO) and MSN (NASDAQ:MSFT) did something yesterday that is both very surprising but long overdue: they conceded the race in search to Google (NASDAQ:GOOG); well sort of.

Yahoo! finally realized that its strength - unlike Google (and apparently I guess) was not the algorithm, but rather - the data it has on people. True, Google has done a marvelous job of catching up to Yahoo! with the launch of Gmail, and acquisitions such as Feedburner.

But, the fact is that Yahoo! has an advantage over Google before the searcher conducts even the search. The folks at Yahoo! seemed to have forgotten this, and tried to be Google instead of beating Google. Today Yahoo! put the emphasis on the right syllable: and that is of personalization.

This is odd, mind you, because when I launched (first on Yahoo!’s own API in spring 2005) they did not seem to keen on personalization but rather mass market, cookie cutter, Google-esque search. I guess it took 2 years and a loss of 10%+ market share to realize that they should wage a new war in search.

After spending BILLIONS on search/, yesterday MSFT hinted that it was working on a new bionic and superhuman search engine. Great. Let’s see how this fares. We’ll keep comments for when we see it.

One thing that is certain, is that between Powerset, Mahalo, Google’s new “we’re everything to everyone at all times” strategy, search is entering a brave new phase.

Very relevant to this is Yahoo!’s announcement that it launched an API for Panama for advertisers to ride.

Mind you, two major issues I had with Y! - as a shareholder and user of their API - was addressed yesterday. Yippie: 2 years is all it took.

Anyway, one thing to note: When it launched the Yahoo! search API, developers and entrepreneurs like myself got excited, used it, but once they launched whatever it was they were planning to launch quickly looked for something else instead of the Yahoo! API. Let’s hope that they don’t fumble the ball with Panama’s API - which could prove far more lucrative than the Search API - like they did with search.

Full Disclosure: I own shares in Yahoo! and developed the vertical search engine, which has a major personalization component in its raison d’etre.

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