They are talking again – Yahoo and Microsoft, and many are claiming a deal in which MSFT buys Yahoo search is imminent. But we’ve heard this before. I don’t think straight out selling Yahoo search to MSFT makes sense. Jerry is right – the piece notes his view that advertisers want to buy brand with search – and as I’ve written in the past, search gives a company like Yahoo extremely valuable data – consumer insights that help drive product development.
Instead, there’s a third way.
Recall my 2009 predictions:
1. I predicted that Yahoo would buy AOL, then MSFT would work a search deal for the combined entity
2. I predicted that Microsoft would gain 5-10 points of share this year.
The two clearly work together.
But what I think is interesting, or could be, is the creation of a third party search company that is owned by Yahoo and Microsoft. I guess I will keep banging the Soverture drum. I wrote this piece back in March of 2007. From it:
Everyone knows how difficult it’s been for both Yahoo and Microsoft to beat Google at its own game – search. Yahoo has been beat up for years over its lackluster monetization efforts – after initially gaining plaudits for its bold purchase of Overture. And over at Microsoft, search is still at the Windows 1.0 phase, and the rumblings I’m hearing out of Redmond are not encouraging. People are leaving, search share is dropping, and recruitment is tough.
But then again, both companies bring a lot to the table. Yahoo did a great job combining several engines into one solid organic search performer, and early reports on Panama are also solid. Microsoft has an innovative approach in its demographically-driven AdCenter. Both companies have significant traffic of good intent. For building search companies, Yahoo is in the right location. Microsoft has huge market cap and cash. Both need to do something, quickly, to prove to Wall St. that they can compete with King Google.
So why not join forces, like back in the good old days when Overture fed both Yahoo and Microsoft? Such a venture solves any number of tough problems