In search of Google's crown

The approval of a search partnership between Microsoft and Yahoo means increased competition in the market and could eventually throw Google from its throne.

After a seven-month wait, Yahoo and Microsoft have finally had their search partnership approved by both the US and European competition regulators giving the go-ahead for an all out war as the pair take on Google. Or in other words, really rev-up the competition between what will now be two major players.

The partnership deal means that Microsoft will power Yahoo search, while Yahoo will essentially be the sales force as the pair aim to "deliver sustained innovation the industry”.

Yahoo CEO Carol Bartz and Steve Ballmer, Microsoft CEO, heralded the approval from both the US Department of Justice and the European Commission as a breakthrough which will mean the two can now focus more on combining science and technology with content to build "relevant online experiences”.

The deal will complement both companies’ strengths. Microsoft is good at web publishing and Yahoo is good at web products (such as Mail, Flickr and Local). Combine the two and serious threat to Google has been created (as well as a serious money making machine). As Yahoo put it, "better search, better everything else, better competition”.

On a global level, Google takes 85.78 per cent of the search market share. Yahoo has 6.16 per cent and Microsoft’s Bing (which only launched in June last year) has just 3.17 per cent, according to January figures from Netmarketshare.

In the US, Google actually lost 1 per cent of its share in January while Bing gained 0.9 per cent – in simple terms, it looks like users of Google are already switching to other search engines. But how will Microsoft's deal with Yahoo impact on the industry, most namely, the search engine marketing industry?

As users switch from Google, search agencies will have to start to invest larger sections of their clients’ search marketing budgets into the Yahoo and Bing platforms so that they can give their clients access to a larger pool of consumers.

Tom Skotidas, head of marketing and business development at search engine marketing agency Firstrate, says that the partnership, which will simplify Yahoo’s search marketing offering, is in contrast to the past few years where investing in Yahoo Search was seen as too much work for too little pay-off.

He adds that with the increased competition in the search space, search marketers are guaranteed to see a faster pace of innovation.

Yahoo’s ability to integrate its rich content around its listings will attract advertisers who are looking for targeted penetration around relevant content. This alone should push Google to improve its own search advertising platform – Adwords – which has often come under scrutiny.

Competition is good for the market place. It forces players to be ‘better’ and to drive innovation and doesn’t leave time for complacency meaning that users and advertisers will always be getting the very best.