Microsoft fuelling Yahoo!’s search engine

  • TECH
  • Wednesday, 25 Aug 2010

SAN FRANCISCO: Microsoft Corp’s technology is now processing all the search requests on Yahoo! Inc’s website in the United States and Canada.

This completes a long-awaited leap that creates a more formidable challenger to Google Inc in the most lucrative part of the online advertising market.

Tuesday’s shift marks the biggest step yet in a partnership that Microsoft and Yahoo! forged 13 months ago after spending years trying to catch up to Google on their own, only to fall further behind.

Microsoft eventually will fuel Yahoo!’s search engine throughout the world, but the transition in other countries won’t occur until next year and 2012.

The technology in the United States and Canada will only field requests made in English for now, with other languages expected to be added in the next few weeks.

The deal doesn’t affect Yahoo! Japan Corp, a separately run company that plans to rely on Google’s search technology.

Since regulators approved their alliance six months ago, Microsoft and Yahoo! have been scrambling to get their systems to work cohesively in the United States so that they will be able to capitalise on the advertising blitz that heralds the holiday shopping season in November and December.

Now that Bing is powering Yahoo!’s search requests, Microsoft’s next challenge is getting its marketing service ready to serve up ads alongside Yahoo!’s search results before the holidays. Yahoo! is providing the ads for now.


By leaning on Microsoft’s Bing search engine, Yahoo! plans to dramatically lower expenses and focus on other products as it tries to snap out of a financial funk that has depressed its stock price.

Yahoo! will sell some ads initially and will use Microsoft’s technology to display them.

During the first half of the 10-year partnership, Yahoo! will get 88% of the ad revenue from search requests on its website. After that, the commission could fall to as low as 83% or as high as 93%, depending on which company handles sales with the top search advertisers.

Microsoft tried to take advantage of Yahoo!’s problems in 2008 when it offered to buy its rival for US$47.5bil (RM152bil today), only to withdraw the bid when the two sides kept quibbling over the price.

As it picks up more traffic from Yahoo!, Microsoft hopes to get a better understanding of people’s search requests and establish Bing as a more compelling alternative to Google.

If it can pull that off, Microsoft will be in a better position to finally start making money in its online division, which has lost US$4bil (RM13bil) combined in the company’s last two fiscal years alone.

Combined, Microsoft and Yahoo! hold a 28% share of the US search market, still far behind Google’s 66%, according to comScore Inc.

Even though Microsoft will be powering Yahoo!’s search engine, Yahoo! said its search results won’t look identical to those at Bing.

That’s because Yahoo!’s engineers can still tweak the results to serve up unique twists, such as different pictures or suggestions, developed by the company. — AP

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