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Bing May Power Yahoo Search


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As the two companies draw close to concluding a long, tumultuous courtship, word has it that Microsoft's Bing may, in the future, power Yahoo's search engine, Advertising Age reports.

The revenue share-based liaison would make Yahoo, the second most widely-used search engine in the United States, a more formidable competitor against Google, which enjoyed 78.48% of June search share compared to Yahoo's 11.04%.

Microsoft falls in third, with 8.45%. But its share increased at least one percentage point as a result of interest in Bing, which launched in early June on the strength of a costly and aggressive online/offline marketing strategy.

A consolidation of both search engines would result in immediate co-ownership of 20% of the search marketplace, which Microsoft CEO Steve Ballmer believes is sufficient enough share to adequately combat Google.

User interest in Bing has already been said to have "rattled" Google. Co-founder Sergey Brin allegedly began making discreet inquiries about how the rival search site's algorithm operates, the New York Post claims.

Not to say negotiations are on completely smooth water. Yahoo wants more revenue from searches that originate from its sites and that result in a purchase, as well as for ad click-thrus following searches for brand names.

"Assigning value to different clicks has proven complex and contentious, and will ultimately determine how much both sides ultimately earn from working together," Ad Age wrote.

There are also points of contention that stem from the amount of user data Yahoo will receive, and whether Bing will receive any visible branding on Yahoo.com.

It isn't yet evident how the two plan to wed their respective online pay-per-click platforms. Microsoft's AdCenter is more feature-rich than Yahoo's Panama, but it suffers from a lack of search volume — which a deal with Yahoo would ease.

Any collaboration between Yahoo and Microsoft will likely be announced this week, and will likely be constructed as a revenue share.

A recent demand from Yahoo for an upfront payment, in addition to revenue guarantees totaling in the billions, yielded a fracture in talks last week. Talks revived late Thursday, according to sources close to the situation.

Microsoft made an unsolicited $47.5 billion bid for Yahoo in February 2008. The latter refused in three different instances over the course of the year — rejections that were criticized as hubris on the part of ex-CEO Jerry Yang, who finally decided to vacate his position in November.

After that, Microsoft CEO Steve Ballmer said he would be "very open" to an online search collaboration with the flailing brand, even if he was "done with all acquisition discussion."

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