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Psstt!! Microsoft and Yahoo's search deal has been approved by the EU and U.S. Department of Justice.  (Source: Sydney Morning Herald)

Microsoft and Yahoo still greatly trail Google. The pair has about 10 percent of the market, while Google owns close to 86 percent.  (Source: Net Marketshare)
Microsoft is pouring money into a last ditch battle to beat Google

The U.S. Depart of Justice and European Union regulators on Thursday approved a 10-year search deal between Microsoft and search engine giant Yahoo.  The deal marks a last ditch effort by the pair to beat their arch-rival, internet search kingpin Google.

Early on, Microsoft realized that there would be value in controlling the internet, a growing means of communication for much of the population.  As early as 1995, Microsoft began offering its own web browser, Internet Explorer, as an addition to its ubiquitous operating system.

Microsoft, however, showed up late to the internet search war.  It launched a search page in 1998, but it was a minimal project -- its search results were provided by Looksmart (1998, 2000-2003) and Altavista (1999).  Google, meanwhile, had launched in 1997 as an original product and by 2000 was becoming a major power on the internet.

Yahoo was yet another key player, who launched even earlier -- in 1995.  However, Yahoo was ultimately outmatched by Google thanks to Google's generally superior results and greater savvy in launching the soon to be mammoth industry of online advertising.

By the time Microsoft developed its own search engine, the battle for search supremacy was essentially over -- Google had won.  Since 2004, the death of AOL shifted the market slightly, handing Google a nice chunk of marketshare to pad its already sizable lead with.

However, Microsoft isn't giving up on it's David and Goliath quest to slay the king of search.  Over the last four years it has poured $5B USD into its search engine efforts to try to gain ground on Google.  The new deal with Yahoo will likely bring some extra revenue to Microsoft, but also likely extra expenses.

Yahoo's search has been powered by Bing, Microsoft's new search engine, since last July.  Meanwhile, Yahoo is focusing on advertising efforts and trying to restore some momentum of its own.  

The pair has a long way to go.  In January, market research firm Net Marketshare reported that Google accounted for 85.8 percent of searches, while Microsoft and Yahoo only accounted for 3.25 and 6.16 percent, respectively.

Still, some are optimistic.  States Kim Caughey, senior analyst at Fort Pitt Capital Group, "Microsoft really has room to throw money at this.  I think it can work. If they can make inroads in specific target areas, they could have something positive to report."

At least the goal for Microsoft is clear; states Microsoft's Yusuf Mehdi, "Really now, the goal is about share gain. If we grow share, we will grow our way into profitability, and we have confidence we can do that."

Achieving that gain will be the tough part, though, especially in the face of ever-successful Google, a firm so ubiquitous that its name has become a verb synonymous with search.

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By geekgod on 2/19/2010 1:58:18 PM , Rating: 2
I like Microsoft products. So, I always try out their new stuff. I tried to switch to their search when it used to be live search, it sucked. So I switched back to Google.

But I am completely sold on Bing. I have stopped using Google and I think the Bing search experience is a lot better. I don’t think I would ever switch back to Google.

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