Binghoo – News of the MSN Yahoo Merger

It has been announced this week that Microsoft and Yahoo have finalised the deal for Microsoft to power Yahoo’s search engine. Microsoft’s previous bid for the Yahoo takeover at $47.5billion. However rather than the full takeover that was previously on the table, the new deal is a revenue share model with MSN taking 12% of all search revenues for providing its technology.

The initial deal is for a 10 year period and reflects Microsoft’s aim to provide Bing, their newly released search platform, with the traffic needed to give it the scale to potentially compete with Google within the search arena. Increases in Bing’s search market share are expected to rise from 6% to 15% as a result of the deal.

For Yahoo, relieving themselves of investment into their search product has the positive impact of increasing cash flow but what happens at the end of the 10 year period for both parties? MSN would potentially lose the search market share they had built and Yahoo would have to heavily reinvest within search technology. Online commentators are already speculating that the deal is more groundwork for a potential MSN acquisition of Yahoo.

Whether the joint venture can present a credible threat for Google in the UK is yet to be seen. For the management of PPC activity, the move to one interface for both engines makes investing time into optimising for Bing more worthwhile in terms of potential ROI from activity.