Yahoo and Microsoft joined hands to beat Google competition

Google is the biggest player in internet search engine market. Both Yahoo and Microsoft were big players in this market for a long time before Google snatched search engine market from their hands. Presently Google has approximately 65 percent market share of search engine and Yahoo and Microsoft have only 7 and 3 percent respectively.

Google has expanded its market from US to European Union (EU), Japan, China and emerging market in India. All these helped Google to establish its global presence. It is worth noted that Yahoo and Microsoft have been old players in these markets.

Microsoft and Yahoo are old players in internet market. Hotmail (Microsoft) and Yahoo mail were started long before Google started Gmail. MSN (Microsoft) and Yahoo search engines are also older than Google search engine. In between, Microsoft has changed its brand name MSN search to Bing search.

However, Google has grown by leaps and bounds and almost eliminated both the big and old players from the search engine market. Google has been generating six times revenue than the combined income of both Microsoft and Yahoo.

Google have 225 million backlinks to their site where as Yahoo and MSN have only 90 million and 23 millions respectively. Google has created an algorithm for pagerank which is the most valued tool in ranking a page in internet and search engine. Google blogs are most popular among all blog sites and Google has joined You tube, the most popular Video site globally. Google also runs social networking site Orkut. Google News is a prominent News site in internet which is much more popular than Yahoo News. Google has started Google groups to compete with Yahoo groups and has recently launched Google buzz to take Yahoo buzz hand on hand.

Google had tried to join hands with Yahoo to lower the competition but failes. Microsoft opposed the deal at that time. However, Google could manage growing its own. Both Microsoft and Yahoo felt the heat. Microsoft lost revenue of approximately $5 B to Google and finally proposed Yahoo to be a partner in search engine business.

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The deal between Microsoft and Yahoo means Bing becomes the search engine for both Microsoft and Yahoo sites. Yahoo will focus on attracting big advertisers.

Microsoft will handle automated auctions of search ads to be used on both sites. They will pay Yahoo a portion of search ad sales generated on Yahoo pages.

Microsoft is hoping to be a credible alternative to Google with this deal. Microsoft will be a single conduit for advertisers to access customers on both Microsoft and Yahoo sites after this deal.

According to comScore, Microsoft handled 11.3 percent and Yahoo took 17 percent of US Internet searches in November 2009.

Theoretically, Microsoft will have over 28 percent of search traffic against 65.4 percent of Google after realization of this deal.

Google is even more dominant in global search market.

Yusuf Mehdi, Microsoft Corporation told that they would become a credible option with 30 percent market share in internet search engine business. He added that the number matters. Yusuf Mehdi is charged with making Bing and the MSN portal a financial success.

It is to be noted that Bill Gates of Microsoft corporation has dethroned Warren Buffet of Hathway corporations from the top position of global billionaires this year according to Forbes.

 Microsoft attempted to takeover Yahoo with an offer of $47.5 billion which was aborted afterwards. Yahoo shares plunged in the American share market after deal aborted.

Google also abandoned its own deal with Yahoo Inc in 2008. Microsoft opposed that deal under pressure from the US Justice Department. However, they proposed Yahoo to be a partner in search engine business last year. This was the biggest effort by Microsoft to establish an internet business to beat their rival Google.

The Antitrust Division of Justice Department in the US took notice of the deal in July 2009 and it was locked. Both the US and European regulators cleared the search partnership of Microsoft Corporations with Yahoo Inc Thursday, February 18, 2010.

Assault of the software company on search engine leader Google Inc has taken a major step forward with this clearance. It is said that the deal is unlikely to substantially lessen competition search engine marketing.

Market participants of America are happy with the deal and expressed support for the partnership. They think it as a way to more viable alternative to Google.

Google has reacted mildly to this deal. They did not comment specifically on the regulatory approval of this partnership between Yahoo and Microsoft. They expressed their view by telling that there has always been robust competition in the search engine business.

It is worth noted that Google did not oppose the partnership.