Google Shouldn't Fear Microsoft-Yahoo Search Pact

The excitement over Microsoft and Yahoo's search partnership might be a little premature. If the companies are able to secure regulatory approval for their search pact, Microsoft will supply the algorithms, images and video in Yahoo Search. But as Prabhakar Raghavan, senior vice president of Yahoo's Labs and Search Strategy division said in a recent press conference, his company "will be free to innovate on top of that layer."

During that press conference, Yahoo also announced a series of improvements to its search platform. It now features a multicolumn design, similar to its home page. It also allows users to find results from YouTube, Yelp and other sites across the Web. The company said that it's planning to continue to compete in the search space, even though Microsoft will be controlling its destiny.

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Some have said that Yahoo's insistence on competing in search is good for both Microsoft and Yahoo. They believe that by having a vision and drive to improve its platform, Yahoo's focus will only help the agreement between the two companies. It's important, they say, for Yahoo to compete, since it still offers the second-most-popular search engine on the market.

I don't agree with that sentiment.

If Microsoft and Yahoo are to have any shot whatsoever of supplanting Google as the search leader, they need to be on the same page. Whether Yahoo or Microsoft decides the focus of the combined effort, doesn't matter. What is important is that the companies are in agreement with what their strategy will be going forward.

The third choice

When Microsoft first attempted to acquire Yahoo, it seemed like the best course of action. The company could take what it wanted -- search -- and completely control its destiny. But after some haggling and eventually walking away from the table, Microsoft tried to follow the next-best strategy: acquire Yahoo's search. That didn't work out so well either.

So after more than a year of deliberations, Microsoft came to what was its third choice: partnering with Yahoo. But by partnering with Yahoo, Microsoft gave up its ability to fully control the vision and direction of the search engine. And now, as we consider the statements made by Yahoo in the recent press event, it might be coming back to haunt Microsoft.