The blogosphere and the web is abuzz with the Yahoo - MS search deal.
Yahoo has turned the clock back a few years to outsource the search and search advertising to Microsoft. If this sounds familiar, this is how Google became Google. It got its initial distribution by powering Yahoo’s search in the late 90s.
I understand why MS wants to do this deal. It is less clear to me why Yahoo did this deal. If it is for short term profits then it would have been better off outsourcing it to Google (which it tried to do but google got scared because of antitrust issues). If it is for strategic reason to fend off google, why let MS power the search instead of otherway around? In fact they have more leverage as they have the bigger search market share. After all Yahoo is a tech company. Search is the center piece in all of internet technologies today and Yahoo is outsourcing it to MS. There in lie some clues as to how Yahoo sees itself. It is signaling that we are not good at internet technology anymore and we just want to make money on the users that visit my site while they last. This sounds more and more like AOL to me. You know where AOL is headed.
It is a great deal for MS as they didn’t have to plough all the money to buy Yahoo and a take huge risk to make it work. They just wanted a better shot at competing with Google by becming the #2 player in search. They didn’t have to fork up a single penny to do this. What a deal!
Yahoo without the search asset is far less valuable. You don’t sell your core asset piece meal. Yahoo would have been better off selling the company as a whole. They should have just taken the MS deal offered last year if they are willing to this type of a deal.