Microsoft Says It’s Open To Search-Only Deal With Yahoo

Coming just 24 hours after the resignation of Yahoo CEO Jerry Yang, Microsoft CEO Steve Ballmer is saying publicly that Redmond is “open” to a “search collaboration” with Yahoo but not a total acquisition of the Sunnyvale company. The Wall Street Journal and Seattle PI report on the remarks, made during a Microsoft shareholder meeting. Meanwhile, Valleywag says that Yahoo has lost Sean Suchter, a key search executive, to Microsoft.

The search collaboration that Ballmer referred to would presumably be similar to the search (as opposed to acquisition) deal previously offered to Yahoo — essentially to have Yahoo outsource search (both organic and paid ads) to Microsoft in exchange for guaranteed revenues over a several year period. Danny did a detailed post on the prior Microsoft search offer to Yahoo (compared with the now defunct Google deal).

That offer, as with the larger acquisition offer itself, was previously rejected by Yahoo as undervaluing the business. It was also rejected because it was seen by Yahoo as removing a strategic component of the company’s larger suite of advertising capabilities.

Circumstances have dramatically changed since Yahoo rejected Microsoft’s offer. And today Yahoo might be more open to a modified version of the earlier Microsoft search proposal; one could imagine a version of the Google-Yahoo deal. However, Microsoft doesn’t have as many advertisers as Google and couldn’t offer as much inventory for “the tail.”

A Microsoft-Yahoo search tie-up wouldn’t incur the wrath of the justice department, however, because combined they would only control about 30% of the consumer search market in the US.

Related Topics: Channel: Industry | Google & Yahoo Ad Deal | Microsoft & Yahoo Search Deal


About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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