Search Biz: Yahoo-MSFT Update; Google’s 20% Time Changing & Google Router Coming Soon?

The latest twist in the Yahoo-Microsoft saga comes from TechCrunch, which reports that a new group is trying to takeover Yahoo … with Microsoft’s money. The group is made up of investment bankers and Silicon Valley big-wigs, and Microsoft would loan the group the money to make it happen. If it sounds a bit complicated, it probably is; TechCrunch says the current economic situation demands creative financing on big merger deals like this. If the report is accurate, and if it happens, the new group would sell Yahoo’s search and search marketing business to Microsoft. TechCrunch says the proposal is in Microsoft’s hands right now, but in a Bloomberg report, a “person familiar with Microsoft’s plans” denied that any talks were taking place.

On the economy/search ads front, IAC chief Barry Diller told an investor conference in Arizona that he sees search advertising surviving better than traditional advertising, and potentially thriving, but that CPC ad revenue among his own stable of sites (Ask.com, Citysearch, etc.) are dropping 5% to 7% year-over-year.

Meanwhile, eMarketer on Tuesday asked if search advertising’s growth will be lost in the noise of all the other poor economic numbers. Yes, search ad spending’s growth rate was down in 2008, but it still grew 21% over 2007. Says eMarketer senior analyst David Hallerman: “Search ad spending may not be recession-proof, but it is proving to be recession-resistant.” Hallerman also says that the need for accountability in ad spending makes search ad spending more attractive than traditional and other forms of advertising.

Making money appears to be the prime focus at Google HQ these days (as Barry Schwartz noted about a month ago), and Google Blogoscoped today has a list of which Google products actually affect the company’s revenues. Of the 88 Google products listed (Yes, 88, which in and of itself makes the list stunning to scroll through), only about 25% are believed to be making the company any money at the moment.

On that note, there’s more from the BBC about Google’s business and its impact on the company’s famed “20% time.” We reported a couple months ago that internal changes at Google would mean major changes to 20% time. In a series of video reports, the BBC addressed that topic with webspam chief Matt Cutts (who has become the de facto face and voice of Google when the world’s media come calling). In its report, Google’s focus in 2009, Cutts says 20% time is still around, but it’s changed:

“You’re not going to do as many crazy, outlandish ideas, but it’s important to keep that spirit…. We won’t tackle as many crazy things, but we will tackle ambitious projects nonetheless.”

In a second video report, Can Google still innovate?, Cutts talks about the Android operating system, Google Chrome, and a few other things Google has been doing recently.

And finally, the Software Development Times blog shared a rumor this week that Google may be developing its own router. They cite “multiple sources, including one inside Cisco.” Why? SD Times theorizes that Google wants to find its own solution to handling the ever-increasing amount of Internet traffic. BNET Technology contacted Google about the rumor, and got the standard line, “It’s our policy not to comment on rumor or speculation.” BNET also points out that’s the same reply Google gave for years when asked if the company was developing its own web browser.