Yahoo and Microsoft Team Up to Take on Google
With the recent news that the Australian Competition and Consumer Commission (ACCC) has given the green light to the proposed Yahoo/Bing search network deal, the question now becomes are Microsoft and Yahoo finally in a position to take on Google?
The deal struck between Yahoo and Microsoft will see Microsoft’s Bing-powered organic search results displayed in Yahoo searches whilst Yahoo’s Search Marketing program will control paid results in Bing. In essence, what it will mean is that Yahoo and Bing will have the same search results.
In Australia, Microsoft’s AdCenter program is not available, as Yahoo and Microsoft already have a deal that allows paid search placements on Microsoft search networks (Bing, NineMSN, Live, etc) to be controlled using Yahoo’s Search Marketing system. This means that in Australia, the deal does not have as major ramifications to the search engine landscape as it does in other countries around the world.
In Australia, the only real change will be in Yahoo’s organic search results, which will now be powered by Bing.
To have an idea about the implications of the ACCC’s decision, it’s important to understand that in markets where there exists an oligopoly (only a small number of firms controlling a large portion of the market), the ACCC will often step in to oppose the big players merging or striking arrangements that could hamper competition.
However, in this case, the ACCC found that the deal would be unlikely to reduce competition because:
- Microsoft and Yahoo already have a deal in Australia with paid search ads. Currently, ads on Bing are already controlled through Yahoo’s Search Marketing program in Australia, meaning the new deal did not present as much of a change to the way Australians are presented with search results when compared with the rest of the world.
- Yahoo and Microsoft’s current market share was so insignificant when compared to Google’s, the deal is unlikely to result in any additional market power.
- The deal is unlikely to reduce innovation in the search engine industry.
The ACCC’s ruling, whilst a good result for Microsoft and Yahoo, is also a bit of a back-hander, because it essentially means the ACCC considers the multi-billion dollar companies of Microsoft and Yahoo small players in the industry, and not big enough to be able to obtain any market power.
But despite the deal, Google is unlikely to be worried. Microsoft has spent millions on advertising Bing worldwide, yet despite this, has failed to grab any significant market share from Google.
As for whether Yahoo and Microsoft are now in a position to take on Google, I doubt it. Google’s massive paid search “cash cow” is funding an innovation program others can only dream of. Wisely, both Yahoo and Bing have realised the only way they can stop Google is take their search engine market share, hence dampening their massive advertising revenues.
However, this is a classic case of easier said than done.
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Read MoreThe Battle for Search Supremacy – Google vs Microsoft – Round 3
A little over 12 months ago, I started a series of posts looking at the search engine war between Google & Microsoft (see part 1 here and part 2 here). When we last left the action, the proposed Yahoo-MSN merger had fallen through, and Yahoo had subsequently signed an $800 million search marketing deal with Google which would have seen Google Ads displayed in Yahoo search results. At the time I claimed that this may have been the death knell for Yahoo! Search Marketing but since then the proposed arrangement was abandoned by Google after it ran into complications with US anti-trust regulators.
The last few months has subsequently seen Yahoo and Microsoft enter into a new deal that will see Yahoo’s Search Marketing ads appear on Microsoft sites and Microsoft’s organic results (powered by Bing) appear in Yahoo searches. Once again, this deal will need to jump through the anti-trust hoops but if it does, it shapes as a real threat to Google’s seemingly invincible search monopoly. Having said that, for Australian users this doesn’t change all that much, as Yahoo! Search Marketing has been controlling paid ad placements on Microsoft sites for some time anyway.
After only a few short years, it appears that Microsoft’s Live search engine experiment has been put to rest and in it’s place has emerged Bing, which has launched a massive $100 million (plus) worldwide advertising campaign designed to capture some of Google’s 80-85% market share. The name Bing was supposedly chosen because it resembles the sound made when you discover what you’re looking for (the lightbulb moment), but more cynical users might more logically associate it with a Windows error message dialog.
I have a slightly different theory, as Microsoft no doubt realised they needed to come up with a name that could make its way into users’ vocabulary in much the same way that “Google it” has entered mainstream vernacular. The old name, Live, didn’t lend itself to being used as an verb, but with Bing, they do have that (faint) hope.
So what does this mean for the ‘Google v Microsoft’ battle? The early signs are that Bing is making some ground into the search engine market share, with figures reporting that Bing has captured between 5-8% of the total search audience since June 2009. This may not seem like much, but in a industry worth billions of dollars every year, this translates to a significant jump in advertising revenues. Being in the industry, I’ve also been asked quite a number of times about Bing, and in the 3 years that Live was in existence prior, I don’t remember it ever being mentioned by a client once.
There’s no doubt that Google still reigns supreme over both Microsoft’s various search incarnations and Yahoo but for the first time in quite a few years, it seems that both Yahoo and Microsoft have abandoned their “if you can’t beat them, join them” mentality when it came to Google and are now actually serious about taking on (or at the very least, making some inroads into) Google’s mantle as the undisputed king of search.
Bring on the next round…
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Read MoreGoogle is Search – But Can Anyone Topple the Giant?
Just as coca-cola was “it” in the 1980’s, in the 21st century Google is the king of search. Their command of both search queries (at somewhere around 65%) and search revenue (around 77% – BRW Magazine) is simply staggering and means that when it comes to search, they are conservatively doubling the performance of all their competitors combined. According to Google’s own promotional material, their advertising network alone reaches 80% of the world’s 1.4 billion internet user’s every month.
So the question then becomes, can anyone topple Google? In the late 90’s Yahoo! was the number one, but Google looked at Yahoo’s weaknesses and created a cleaner search engine that supposedly delivered better search results. But can anyone do it again?
Google continue to go from strength to strength, and their reach is unrivalled. Their advertising network includes AOL, Ask.com and now Yahoo and their recent acquisitions of DoubleClick and Youtube have only broadened their market.
With the much-hyped Yahoo! and Microsoft deal falling through, and Yahoo’s subsequent search marketing deal with Google, who is left to take on the giant of search? Let’s go through the main competitors:
Yahoo!
Currently sitting in a distant second in terms of both advertising and search query share, many claim that Yahoo’s search algorithm is actually superior to Google’s. Whether this is true or not is irrelevant, as the vast majority of users have spoken with their clicks and head to Google for its clean feel. The big thing that Google has over Yahoo is the way Google is able to separate out each of its products to keep that clean feel. Yahoo pack everything they offer into one homepage, which can make it hard to identify what their primary focus is. As a result, many users wonder whether Yahoo’s search is being given the focus it deserves. Yahoo will certainly remain profitable, as they have a loyal fan base that swear by it, but I just can’t see them storming the Google fortress, particularly now they are relying on their ad network.
MSN/Live
If Yahoo is a distant second, then Microsoft’s Live Search is back an eternity in third place. Again, however, there are those out there who believe Microsoft’s search to be better, but I am a definite sceptic on this one. For Microsoft to really succeed in search they need a massive overhaul, and massive overhauls are not really Microsoft’s style. More than likely Microsoft will just let Live run its course, as it doesn’t really seem to have the desire to be number one in search, or else it probably would have put more emphasis on it’s deal with Yahoo rather than letting it slip by the wayside.
AOL, Ask, etc
The old players in the market. Most of these engines still get a decent run of traffic, but most are also relying on Google advertising deals to keep them profitable. These guys are not real challengers for the crown.
Mahalo
Mahalo is an interesting one. Mahalo is Hawaiian for thank you, and the premise behind this start-up is that it is the web’s only human-powered search engine. That is, its search results are not driven by algorithm’s but by human generated results pages. To me it seems like Wikipedia and Dogpile rolled into one, as the user is able to search all the various other engines if Mahalo does not have a page created. I don’t think the concept of a human-powered search engine can work, particularly when it comes to updating it constantly at the speed of web. Wikipedia works but I don’t see Mahalo taking off. It is useful however, if you want to search all the major search engines (and Wikipedia, Youtube, Flickr) all in one go. Other than that I don’t see it ever matching Google. Google’s algorithm’s refresh daily, which is almost impossible for a human-powered search engine to match.
Clusty
Another meta approach to search. Just like Dogpile, Clusty attempts to rank results by aggregating results from other search engines. Once generated however, Clusty clusters results together into categories of results. This is a useful tool but won’t have Google shaking.
Other Small Start-ups
Quintura, Blinkx, Powerset, Kosmix, the list goes on. All these players however, are only targeting tiny market niches, market niches that Google could quite easily swat away with one extra feature to their own search results. The other problem most of these smaller players have is they lack the resources to operate their own search algorithm’s and many of the newcomers rely on refining a Google search.
The Verdict
Here’s the problem as I see it for the other players attempting to usurp Google; all of them either rely on Google’s search is some way or are targeting niche markets that Google could themselves cover by throwing a few million at a new Google product.
Google have already done this with email. Google took a search-based approach to internet-based email and eroded Microsoft’s Hotmail monopoly in a flash, so these small niche players had better watch their back. If Microsoft can be beaten so easily, where does that leave the little guy?
But all the big players (including Yahoo thanks to this new deal) are relying on Google in some way either for search results or search advertising. All, that is, except Microsoft. Microsoft’s Live is the one major search engine out there not dependent on Google’s algorithms or advertising dollars.
Over the last few years Google has continually stripped away Microsoft’s stranglehold on all things digital, and maybe the time is right for the old dog to get angry and strike back.
Alas, however, it doesn’t look like that’s going to happen…
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Read MoreThe Battle for Search Supremacy – Google vs Microsoft
The recent news that Microsoft and Yahoo have decided not to go ahead with their planned merger has led to Microsoft announcing that they intend to take on Google by themselves. On paper it seems like an achievable task, America’s second biggest listed company taking on number 16. In fact, with almost double the market capital behind it, Microsoft should probably be considered favourites in a head-to-head tussle.
But why then is everyone so sceptical about Microsoft’s prospects? Why is the Microsoft juggernaut all of a sudden vulnerable to this relative rookie company with big dreams? The answer is simple; Google do search better and they have the market in the palm of their hand.
Microsoft’s MSN/Live search and Yahoo’s search are just not making inroads against Google’s tried and tested simple approach. Google has a no-fuss approach to search. Their homepage is simple, results are clearly displayed and most users have faith in the Google algorithm’s ability to deliver relevant search results. Live and Yahoo! have not worked this out or refuse to blatantly copy Google’s premise.
The name Microsoft once struck fear into the hearts of all other digital companies, because it seemed that no matter how well you did something, Microsoft could throw millions at it and take your market.
But Google has changed all that. Microsoft have been trying for years now to replicate Google’s success online, but according to BRW Magazine, have only managed around 5% of US search revenue market share, compared to Google’s whopping 77%. Google has humbled the once un-toppable giant.
The secret to Google’s success is that, out of all the big search engines, they have the most conspicuous ads. Live and Yahoo! both have ads cluttering their homepages whereas Google only display ads in search results and their AdWords quality score algorithm keeps their ads fairly relevant as well. For this reason, a search results page in Google does not “feel” like an advertising billboard, which can be the case in other search engines.
So that brings us to now, where Microsoft is once again claiming that they are ready to take the mantle as the net’s premier search engine. Microsoft are currently working on capturing the display ad market, with development teams working overtime on technology for video and banner ads that display more relevant ads based on a user’s browsing patterns.
Of course Google are not going to sit back and wait for Microsoft to gain ground on them, and their recent acquisitions of DoubleClick and Youtube suggest they are already going on the offensive.
So who’s going to win? Microsoft or Google? From what I’m seing the answer is Google. Google have the market cornered and are not going to give it up without a fight.
One of the reasons I believe that Google will win (this round) is that they have quite remarkably managed to dodge the ‘big bad company’ tag. It is very common for large corporations to become disliked in the court of public opinion because they are greedy or ‘out to get us.’ It seems that no matter how big Google get, they are still liked by the public. This can probably be traced back to the way Google manages its staff, who work in more of a resort than an office. In the search engine wars, Google are the good guys whilst Microsoft are the baddies.
Microsoft will undoubtedly keep trying, they always do. Search engine advertising is too big a market for Microsoft to give in, but if this new display ad platform is once again outperformed by Google, they may have to go crawling back to Yahoo. Microsoft have already hinted that they may revisit the idea by putting the merger decision to a shareholder vote, indicating that even inside their own ranks they have doubts over their own ability to beat Google.
My gut feeling says that Microsoft and Yahoo will be together sooner rather than later. If and when this happens it is critical that they do not try and copy Google, but rather come up with a new kind of search experience, that delivers the most relevant search results (including ads) and offers more for Internet users, but I won’t be holding my breath.
Round One – Google Knockout…
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