Microsoft-Yahoo 2.0 and Google

More than a year after Yahoo shot down Microsoft’s $45 billion takeover bid, a new deal is afoot, said Peter Burrows and Robert Hof in BusinessWeek. The reportedly imminent deal is complex—Yahoo will “essentially scrap” its search technology for Microsoft’s newly rebranded Bing, and Microsoft will let Yahoo sell both companies’ search ads. But the target is clear: “arch-rival Google” and its 65 percent share of the lucrative Web search market.

The deal looks “awful,” said Henry Blodget in Silicon Alley Insider. Not only is it “complex as hell,” but it’ll be a “management and logistical nightmare” to merge Yahoo’s sales operations with Microsoft’s underlying AdCenter technology. “Who will Yahoo’s salespeople yell at” when something goes wrong? “What if Microsoft’s clients hate Yahoo, or vice versa?”

This Microsoft-Yahoo tie-up is actually “much less significant than ones previously envisioned,” said Kara Swisher at All Things D. There’s no takeover. And unlike a year ago, when Microsoft offered $1 billion for Yahoo’s search assets, this deal has “no upfront payment to Yahoo.” Still, it’s “an important coup” for Microsoft, because it leaves Bing as Google’s only real search-engine competitor.

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The details haven’t even been announced, said Kip Kniskern in LiveSide, yet everybody has an opinion. Here’s mine: This is “a ‘foot in the door’ move” by Microsoft. It won’t get much revenue at first, but with Bing’s Internet search share jumping to about 30 percent, “the perception of giving Google a run for its money may be worth it to Microsoft.” And real competition to Google might even follow.