Microsoft and Yahoo! Merger: Good-Bad-Poor?
Finally after months of rumor, Microsoft and Yahoo! have decided to join forces and form a partnership in Internet search and advertising that primarily aims to take on market leader Google’s search engine supremacy.
The merger will include Yahoo! selling pay-per-click advertising on both Microsoft and Yahoo! websites which they hope will add revenues as there will no longer be competition between each other. But Yahoo! will keep 88 percent of the revenue. The merger will add to Yahoo’s earnings of around $277 million extra a year plus there will be a considerable drop in its investment in technology development and this merger will last for 10 years.
However, Yahoo! made two critical mistakes. Around June 2000, it replaced Inktomi’s search engine with Google and actually paid Google to put their results on the Yahoo! website. Users loved Google’s search engine and decided to use Google directly rather than Yahoo!. Just last year, Yahoo! made another crucial mistake to reject Microsoft’s 46.6 billion proposals last year. It shows how two simple decisions can completely affect the route of a company and the overall market.
So why did Microsoft obtain Yahoo!? The answer is online publicity and advertising. This merger means more competition to the online advertising and search engine market. Microsoft is hoping that a long-term merger with Yahoo! will give it the scale and understanding it needs to attract more users, advertisers and ultimately more revenue.
Even though the Microsoft-Yahoo! merger has increased their market share to a total of 28 percent in the United States alone, Google still holds the majority of it by having 65 percent of the market share, and it will be a tough fight for Microsoft-Yahoo! to attract the Google users to them.
Users love Google as it is just plain search engine and compared with the other search engines there is just too much mess. Users wants an easy search engine that is accurate in its results when they type in their searches.
Microsoft will prove to be a challenge though for two reasons. Firstly, it has plenty of cash to spend on online advertising and search engine technology and secondly future growth of the company depends on this merger.
Microsoft’s new search engine Bing has started to grab market share and with the merger of Microsoft and Yahoo!, this will effectively replace Yahoo!’s search engine on the Yahoo! website. The advantage of using Bing is the fact that it allows users to purchase book travel, goods and discover credible health data easily. Users can use Bing for shopping and the site provides users with an Amazon-like experience. Although some analysts say this is less likely to attract fans of Google’s search engine but may attract those who use Yahoo!’s search engine.
There is still a long way ahead for Microsoft-Yahoo! to even take some of the lead from Google. But certainly, competition drives companies to improve their products/services. For some time now Google is the KING in the search engine industry and a Microsoft-Yahoo! combination will create a search engine that will surely present a bit of a threat to Google. Only time will tell how users will respond to this change.






