The Pakistani Spectator

It’s already been more than a year since Microsoft’s deal to outright acquire a Yahoo for a staggering $44.6 billion fell apart. But much speculation has remained as to whether or not the two companies would still end up working together in some capacity, with comments from executives on both sides adding fuel to the fire at different points.

Now, the focus is on Microsoft’s new search engine – Bing– becoming the search provider on Yahoo.com, which would combine to give the companies a more formidable rival to Google, at least in terms of market share and ad inventory. AdAge is reporting that a deal “is likely to be announced this week” that would give Microsoft roughly 30 percent share of the online search market.

How would such a deal be structured? According to the report:

“Yahoo would be allowed to sell search ads on Bing.com as well as its own site, giving it more search inventory to sell and making it a bigger player in the search sales front. It would also immediately be able to save millions by not having to maintain its own search infrastructure. The latest terms of the deal underscore Microsoft’s devotion to developing and owning technology vs. selling media.”

In other words, Yahoo further cuts costs while opening up a big new revenue opportunity. And Microsoft finally becomes a serious player in search as a solid (but still distant) number two to Google. It makes a lot of sense in principle – now we’ll wait and see if the two companies can finally hammer out the details of such a deal, something that has escaped them for nearly a year and a half.

Even if they do, however, keep in mind that neither company has been able to organically improve market share by any meaningful amount in the last few years. A deal won’t suddenly change that – it will still be up to Microsoft to make Bing a significantly more powerful search tool than Google.

Source: Mashable