How Will Yahoo Fare Out?

August 3rd, 2009 at 12:00 am

Yahoo Logo

Just recently, news of a new partnership between Yahoo and Microsoft surfaced. This time, it is the real deal. The said agreement will have Yahoo hand the online search reins over to Microsoft. By doing so, Microsoft and its new online search technology showcased in Bing by using it to run Yahoo’s search facility. Yahoo on the other hand can fully concentrate on its online advertising business and hope to improve the company through better ad sales.

The new partnership is said to last for 10 years. It is considered as a more limited deal than what Microsoft offered with its $47 billion offer to buyout Yahoo. This time the agreement focused on a partnership rather than money exchanging hands. The deal clearly sees what Microsoft will get in terms of benefits. What many people are quite concerned nowadays is how Yahoo will get better as a company by forging the said deal.

In the case of Yahoo, the benefit may not be as concrete as it may seem. Handing out what is considered a huge opportunity in the online search market to Microsoft might be putting it somewhat on a losing end. This might be showing the path that the new management at Yahoo might be taking. By giving up on the online search market, Yahoo might be concentrating more on making money out of online advertising. Although Microsoft may be using its own online search technology on the Yahoo homepage, a bulk of the ad revenue (88 percent) for the site would still go to Yahoo.

For some people, handing over their online search market may someday be costing Yahoo, being a distant second to Google in the online search market. It may be quite a sacrifice that Yahoo may be making here.

But looking at it from another perspective, Yahoo may also be trying to find something to focus on for the benefit of the company as a whole. Having several businesses going at the same time might not be for its best interests. Focusing mainly on the online advertising business might give them that boost that they need to make Yahoo better.

Well, it is too early to tell if everything would go out as what both companies have planned and agreed on. But one thing is clear from here on out- there certainly will be dramatic changes in the war of the online search giants, and Yahoo might be trying to steer clear out of it.