Google, Yahoo Back Together in Search Deal
Rivals Yahoo (YHOO) and Google (GOOG) have come together under a deal revealed in October. The two battle in the search business, and according to the comScore’s rankings of desktop search for October, Google had a 63.9% market share, followed by Microsoft (MSFT) at 20.7% and Yahoo at 12.6%. Yahoo will now work with Google in addition to its existing partnership with Microsoft’s Bing. Let’s explore the details.
Google, Yahoo Back Together in Search Deal
Past Relations
This is not the first time that Yahoo and Google have worked with each other. In 2000, Google was made Yahoo’s default provider for search results and ads. The partnership lasted until 2004 when
Yahoo came up with its own in-house system for search and ad serving which were mostly picked via acquisitions.
In 2008, Yahoo wanted to enter into a deal with Google, but that was scrapped on antitrust concerns by the U.S. Justice Department. Yahoo eventually entered into a deal with Microsoft in 2009, giving up its own search tools and technology. Yahoo, however, hasn’t seen desired results and has been seeking to bolster its revenue from search beyond Microsoft. That became evident as Yahoo and Microsoft agreed to amend the search partnership in April.
The New Deal
In July, Yahoo confirmed it was testing other search service providers including Google, and Yahoo CEO Marissa Mayer announced during her company’s third-quarter earnings call last month a three-year non-exclusive search deal with Google for desktop and mobile, pending a review by the Justice Department. Under the deal, Google will provide ads to Yahoo under its AdSense for Search (AFS) service and will pay Yahoo a certain percentage of revenue for AFS ads displayed on Yahoo websites. Yahoo, meanwhile, will pay Google fees for requests for image search results or web algorithmic search results.
The Bottom Line
Although the deal looks good now, it still needs to get an approval from the Justice Department and it excludes Europe, most likely to circumvent antitrust issues. If all goes well and the deal gets a nod from regulators, Yahoo will become a common platform which would indirectly connect the three major competitors in the Internet search and ad segment. For now, Yahoo and Google must be keeping their fingers crossed that 2008 isn’t repeated.
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