Microsoft and Yahoo! Form Partnership!

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Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Wed Jul 29, 2009 1:05 pm

Read all about it!

http://news.yahoo.com/s/ap/us_microsoft_yahoo

click the spoiler below to read the article; I've bolded some interesting facts.

Spoiler:
Microsoft Corp. has finally roped Yahoo Inc. into an Internet search partnership, capping a convoluted pursuit that dragged on for years and setting the stage for them to make a joint assault against the dominance of Google Inc.

The 10-year deal announced Wednesday gives Microsoft access to the Internet's second-largest search engine audience, adding a potentially potent weapon to the software maker's Internet arsenal as it tries to better confront Google, which is by far the leader in online search and advertising.

Microsoft didn't have to give Yahoo an upfront payment to make it happen, as many Yahoo investors had been counting on ever since Microsoft dangled $1 billion last summer in an attempt to forge a search partnership then.

Google tried to stop Yahoo from falling into Microsoft's camp. Last year it formed its own proposed search advertising deal with Yahoo, only to be forced to retreat from that alliance after U.S. antitrust officials threatened to sue.

Now the extended reach Microsoft is gaining will let it introduce its recently upgraded search engine, called Bing, to more people. The Redmond, Wash.-based software maker believes Bing is just as good, if not better, than Google's search engine. Taking over the search responsibilities on Yahoo's highly trafficked site gives Microsoft a better chance to convert Web surfers who had been using Google by force of habit.

"Microsoft and Yahoo know there's so much more that search could be," said Microsoft Chief Executive Steve Ballmer. "This agreement gives us the scale and resources to create the future of search."

Even with Yahoo's help, Microsoft has its work cut out. Combined, Microsoft and Yahoo handle 28 percent of the Internet searches in the United States, well behind Google's 65 percent, according to online measurement firm comScore Inc. Google is even more dominant in the rest of the world, with a global share of 67 percent compared to a combined 11 percent for Microsoft and Yahoo.

In return for turning over the keys to its search engine to Bing and promoting it, Yahoo will get to keep 88 percent of the revenue from all ads that run alongside search requests on its site for the first five years of the deal. Yahoo also will have the right to sell search ads on some Microsoft sites.

Yahoo estimated the deal will boost its annual operating profit by $500 million and save the Sunnyvale, Calif.-based company about $275 million on capital expenditures a year because it won't have to invest as much in its own search technology. An unspecified number of Yahoo engineers will lose their jobs as the company scales back, Yahoo Chief Executive Carol Bartz told analysts in a Wednesday conference call.

The deal isn't expected to close until early next year, and then it could take another two years before all the pieces of the partnership are in place worldwide. The companies first will give antitrust regulators time to review the proposed partnership's effects on the Internet ad market and then it will take time to stitch together their different technologies.

Shares of Yahoo plunged $1.91, or 11.1 percent, to $15.31 in late morning trading, as investors expressed disappointment over the fact that the company won't be getting an immediate windfall. Microsoft shares edged up 7 cents to $23.54 while Google shares shed $6.38, or 1.4 percent, to $433.47.

"I think the market hasn't figured out that there's not much I can do with an upfront payment," Bartz said in a Wednesday interview.

"It's very clear that (in this deal) I get virtually all my revenue at no cost. That's what's important on an ongoing basis. A one-time upfront payment, what am I going to with it? Collect interest on it every year? That doesn't help me with" Yahoo's finances.

The alliance could give Yahoo a chance to recoup some of the money it squandered in May 2008, when it turned down a chance to sell the entire company to Microsoft for $47.5 billion. Yahoo's market value currently stands at about $22 billion, and the company, while profitable, is coming off a quarter in which revenue slid 13 percent.

The two rivals began talking about a possible partnership as far back as 2005 before Microsoft intensified the courtship with last year's attempt to buy Yahoo.

It took Bartz just six months to strike a deal with Microsoft — something that neither of her predecessors, Terry Semel and Yahoo co-founder Jerry Yang, seemed interested in doing.

Shortly after her arrival, Bartz made it clear she was willing to farm out Yahoo's search engine for "boatloads of money" as long as she as thought the company would still receive adequate information about its users' interests. Although Yahoo won't get any immediate cash, Bartz predicted the deal will still be a boon for the company.

"This agreement comes with boatloads of value for Yahoo, our users, and the industry," Bartz said.

Under the agreement, Yahoo will have limited access to the data on users' searches — which yield insights that can be used to pick out ads more likely to pique a person's interest. The value of that information is why Microsoft wants to process more search requests.

Like Yahoo, Microsoft has invested billions in its search technology during the past decade, yet remained a distant third in market share while its online losses piled up. The company's Internet services division lost $2.3 billion in the fiscal year ending in June, nearly doubling from the previous year.

Microsoft is counting on Bing, unveiled in early June, to turn things around.

Bing has been getting mostly positive reviews and picking up slightly more traffic with the help of a $100 million marketing campaign. Analysts believe Bing's successful debut pushed Microsoft to reopen negotiations so it could expose its search engine improvements to a wider audience more quickly.

"The reason the deal happened now is the recent success of Bing. I think it put pressure on Yahoo, as well as Yahoo not being able to turn it around on its own," said Gartner Inc. analyst Neil MacDonald.

Microsoft and Yahoo are bracing for scrutiny into whether the combination would have an adverse effect on competition in the online ad market.

The U.S. Justice Department spent five months dissecting last year's proposed search advertising partnership between Google and Yahoo before concluding that it would give Google too much control over the market. And under the Obama administration, the Justice Department is promising to pore over deals more rigorously than it did when the proposed Google-Yahoo partnership came up.

Microsoft used its lobbying muscle to spearhead the campaign against Google teaming up with Yahoo, so it wouldn't be a surprise if Google turned the tables.

"There has traditionally been a lot of competition online, and our experience is that competition brings about great things for users," Google spokesman Adam Kovacevich said. "We're interested to learn more about the deal."

A key lawmaker on antitrust issues said the Yahoo-Microsoft plan "warrants our careful scrutiny." Sen. Herb Kohl, a Wisconsin Democrat, said the Senate antitrust subcommittee he chairs will review the deal "because of the potentially far-reaching consequences for consumers and advertisers and our concern about dampening the innovation we have come to expect from a competitive high-tech industry."

Peter Kaplan, a spokesman for the Federal Trade Commission, declined to comment. A spokeswoman for the Justice Department couldn't immediately be reached for comment.

Ballmer expects that support from online advertisers and Web publishers who would like a stronger rival to Google will eclipse any objections that Google might raise.

"We think this is one of these cases where the coming together will produce more effective market competition, not less," he told analysts in Wednesday's conference call.

Just getting Yahoo to succumb to its latest advance represents a coup for Microsoft and the boisterous Ballmer, who was rebuffed for so long.

"I don't regret at all that we started this 18 months ago and we are done today," Ballmer said in a Wednesday interview.

Microsoft is doubling down on Internet search at the same time Google is attacking Microsoft's bread-and-butter business of software for personal computers.

Google is working on a free operating system for inexpensive PCs in a move that could threaten Microsoft's Windows franchise. If it gains traction, Google's alternative, called Chrome OS, could divert some revenue from Microsoft while the software maker is trying to grab more of the money pouring into search advertising.

Chrome OS isn't supposed to hit the market until the second half of next year. That means Microsoft could get a head start on Google in the duel to steal each other's financial thunder.

I don't know what to say to their newly formed partnership; it makes sense that they want to combat Google but is that enough? Will they effectively work together to rival google in the war of internet dominance? The case between Google and Yahoo! attempting to form a partnership last year and the U.S. justice department denying that reminds me of the supreme court case for microsoft in United States vs. Microsoft. The government called microsoft an abusive monopoly for their dominance of the Windows operating system whereas in google's case, the government calls them a monopoly for internet searches, advertisments, and revenues. If there's one thing history has taught us, it's that nothing lasts forever. Every major company eventually will face competition that will rival them. The thing about the internet is that it is impossible to monopolize. Rockfeller bought all resources for his buisness in the 20th century through owning all ways to produce his product(horizontal integration) whereas Andrew Carnegie bought every service for his product to monopolize the land (vertical integration). Companies like Google, Yahoo, and Microsoft are stuck in between trying to get everybody to use their product. Eventually, it becomes survival of the fittest and very difficult to predict what will happen.

Sorry for the run-on sentences and history refrences, but my point is simply that we should hope Microsoft and Yahoo know what they're doing.

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Re: Microsoft and Yahoo! Form Partnership!

Post by blivvy on Fri Jul 31, 2009 4:24 pm

Ah Microsoft are still looking for world domination Razz

And about the google chrome os o_O Prob pwn windows

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Re: Microsoft and Yahoo! Form Partnership!

Post by Lucario*)WoN(~Donuts~ on Fri Jul 31, 2009 4:45 pm

O_o

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Re: Microsoft and Yahoo! Form Partnership!

Post by Wonko the Sane on Fri Jul 31, 2009 6:06 pm

Microsoft is rapidly losing ground on all fronts. Google's Android OS and Apple's iPhone have the Zune people digging their own graves. Apple is somehow making more money than ever in the middle of this economic crisis, where every other company is making less money than previous years. Means more people are buying Macs. Steve Ballmer called this a "rounding error" in a recent interview, which really means he's scared shitless.

There's no way Microsoft and Yahoo can team up to compete with Google. It's just.... no way. No sense even debating it.

Then Google's announcement of Chrome OS for netbooks poses some huge problems for Microsoft. They still want to make people pay to put Windows on a netbook. Their alternative strategy is to cripple Windows 7 so it can't really do anything and put that on netbooks for like 10 bucks. What would you choose? Free, open source OS that boots in mere seconds and can undoubtedly be expanded upon and customized to do what you want, or some piece of crippleware that's so broken it doesn't even work properly?

Far as monopolies go, I think that sort of thing gets pretty complicated and hard to prove/attack a company for when they give all their products away for free, a la Google. Microsoft and Yahoo, on the other hand... not so much. Will be interesting, at the very least.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Fri Jul 31, 2009 10:21 pm

Well the strongest companies are strong because they're the best. When all the little guys go down, we'll be left with one choice, and less competition. which could mean prices down right?

Apple, Verizon is growing too. pay attention to what's going on with cell phone companies too.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Fri Jul 31, 2009 10:33 pm

Zune is an epic fail.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Wonko the Sane on Sat Aug 01, 2009 2:09 pm

All the cell companies in the US are under some intense scrutiny by the FCC just now because of their exclusivity deals with handset makers (Apple and AT&T). But they're also investigating their practices as a whole. If we're lucky, we won't have to pay up the wazoo for text messages anymore when this is all over, and VOIP will be allowed on AT&T's 3G network. If we're not lucky, the cell companies will get a slap on the wrist and realize they can't continue to exploit all of us willy nilly unchecked.

Either way, it's a good thing.


Bugenhagen wrote:Well the strongest companies are strong because they're the best. When all the little guys go down, we'll be left with one choice, and less competition. which could mean prices down right?

But less competition is always a bad thing. That's what's happened with the cell industry right now.. they all got together and raised the cost of their text messaging plans together. If they were actually competing for our money over that, we wouldn't be paying 25 cents for a message that costs them NOTHING to send over their network. Text is just data, and people like me with an iPhone already pay for an unlimited data plan.

At the end of the day, when smaller companies get run out of business by larger companies, the consumer loses.

Bugenhagen wrote:Well the strongest companies are strong because they're the best.

Microsoft was the strongest company around in the computer world until just recently, now they're falling seriously behind. But that doesn't mean they were the best. They make a crappy OS that's unintuitive, hard to use, and fraught with bugs and security problems. They're just good used car salesmen who know how to make people want their crap.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Loki on Sat Aug 01, 2009 4:33 pm

Wonko the Sane wrote:people like me with an iPhone already pay for an unlimited data plan.
Or you could just use a home phone. I hate technology sometimes... Crying or Very sad

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Sat Aug 01, 2009 7:38 pm

Well Microsoft obviously isn't the best because the best, strong companies stay strong, like Apple. Sony is doing well and Nintendo isn't doing too shabby either coming out with game after game.

Soon, considering Verizon growing, (bought alltell i think it was) the iPhone won't be an AT&T exclusive. Sooner or later, they'll buy it. Anyways, my Touch is incredibly close to an iPhone. They just came out with video on the iPhone, and the Touch will get video i think in September. Why do you really need all that crap on a phone? I say, buy a really cheap phone with the best networking plan that suits you, and then get a Touch, You can call people whenever you want on your crappy fat phone for free, then when you bored in the taxi/subway or something, pull out your touch.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Sat Aug 01, 2009 10:13 pm

Bugenhagen wrote:Well Microsoft obviously isn't the best because the best, strong companies stay strong, like Apple. Sony is doing well and Nintendo isn't doing too shabby either coming out with game after game.

that's something which couldn't have been uttered a decade ago.

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Re: Microsoft and Yahoo! Form Partnership!

Post by blivvy on Sun Aug 02, 2009 7:48 am

Also look at microsoft's xbox 360. When it came out first it was destroying game discs and overheating, which its still does today. But instead of fixing the problem they just give out a 3 year warranty -_-

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Sun Aug 02, 2009 2:35 pm

The 360 kinda sucks. Don't you have to pay for internet after a free trial?

The Wii kinda has sucky internet...

That's why the PS3 is the best, besides the overwhelming price.

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Re: Microsoft and Yahoo! Form Partnership!

Post by blivvy on Sun Aug 02, 2009 5:05 pm

Ye u just get like a months free trial on the 360. Ur rite PS3 is best. It has the best games etc. I just wish I had of waited a bit longer and got a PS3 instead of 360. Oh well, as long as it still runs and has sum decent games coming out. Pity there arent any exclusives tho

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Re: Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Sun Aug 02, 2009 7:05 pm

PS3 Slim might be coming out too, so just wait for that if you want a PS3.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Sun Aug 02, 2009 8:15 pm

If they're comin out with a slim it's probably going to be out of most people's budget. I'm content with getting the ugly fat one if that's the only other characteristic.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Sun Aug 02, 2009 10:42 pm

I think it'll cost less too. Check Gamespot for more info on that.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Cap'nJackSparrow on Mon Aug 03, 2009 4:32 am

The PS3 is an oversized, overpriced attempt by Sony to show that people will buy Sony regardless of how few good games and exclusives it has.

The 360 is Microsoft capitalising on moderate success with the XBOX, but with a poor quality console and numrous technical glitches.

The Wii is Nintendo trying something new with a lot of success, but with too few actual games and a motion sensing controller that needs an add-on to be fully motion sensing.

If anything, it will make for an interesting 8th generation of consoles...

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Mon Aug 03, 2009 2:44 pm

The Wii is still discovering. My dad told me this a long time ago but i'll try to recreate the conversation best i can.

One of my dad's friends at his work(my dad's a computer engineer) created a mod i think it was for his Wii so that when he looked just on the T.V. he would look around corners and things.

You can only get so motion sensitive without actually doing something to your body. Once you think about it, Nintendo has done a really great job. That's why it took so long.

Sony is a pretty great and powerful company. The ps3 may be expensive, but it's less than at launch. Think about what your getting. Great graphics, free internet, a decent controller, and a very playable system. The Wii has terrible internet basically. and you have to pay for Microsoft's xbox 360 internet.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Cap'nJackSparrow on Mon Aug 03, 2009 2:49 pm

The Wii does not have terrible Internet. I can always get a race on Mario Kart Wii at any time of day (Super Smash Bros. Brawl however...) The Wii isn't about the Internet mostly, it's just a useful add-on.

The PS3 would be fine, were it not for the high price, discontinued backwards compatability, poor porting quality, poor exclusivity rates and grill-like appearance. Seriously, I would try and grill something with it if I didn't know it was a PS3...

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Mon Aug 03, 2009 3:04 pm

That's why their coming out with a thin version of the ps3. also, it has a few exclusives like Resistance for one. Keep in mind that..it's Sony. They don't depend on the PS3. Same as Microsoft. But the Wii on the other hand, they have to keep sales up.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Cap'nJackSparrow on Mon Aug 03, 2009 3:45 pm

Funnily enough, they have kept them up.

If we strip away all the problems and everything else and just look at the consoles, the Wii is the weakest but most innovative, the 360 is powerful but badly built, and the PS3 is the most powerful but with an unrealised potential.

Like I said earlier, the 8th generation will show who had the best idea...

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Re: Microsoft and Yahoo! Form Partnership!

Post by blivvy on Tue Aug 04, 2009 5:14 am

lol. i shouldnt of mentioned 360. this has turned into another console debate :p

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Tue Aug 04, 2009 8:51 am

Well if one of the admins feels like moving our console posts to my poll about consoles that wouldnwork.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Theicecreaman on Tue Aug 04, 2009 4:16 pm

How about this: The next post that talks system wars will be deleted.

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Re: Microsoft and Yahoo! Form Partnership!

Post by Bugenhagen on Tue Aug 04, 2009 7:05 pm

That works.
Let's see how this partnership plays out.

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