Dealing with Divided Interests

 
 
By Don Reisinger  |  Posted 2009-08-26 Email Print this article Print
 
 
 
 
 
 
 


Realizing that, Microsoft needs to immediately set a direction for its combined search agreement. It needs to explain to Yahoo that it is giving up a significant amount of cash just to own the rights to the search engine. It needs to have the creative license to take Yahoo's search where it needs to go.

It also needs to remind Yahoo that the online company has little to lose. Under the terms of the agreement, Yahoo can reduce its expenditures, while generating significant revenue from Microsoft. Microsoft, on the other hand, has all the risk: it needs to maintain the search service, while still investing in it to compete with Google. It's a tall order.

If there is a divide in the Microsoft-Yahoo pact, Microsoft won't come close to achieving its goal of supplanting Google as the search leader. Microsoft will want to follow its direction. Yahoo will want to follow its own direction. And since it feels that it's still competitive in the marketplace, Yahoo will be trying to do everything it can to take searchers away from Bing, just as much as Google.

After all, it's in Yahoo's financial interests to do so. It can generate higher revenue from those Bing converts. It might also be able to get them to switch to Yahoo's services, such as Yahoo Mail. It's a win-win for Yahoo. Although it needed to increase its search market share, Microsoft has brought on a partner that, based on its comments to this point, might not be on the same page.

Google was supposed to be the focus of the agreement. It was supposed to be Google that would worry about the partnership. Now, it seems that that plan has backfired and it's Microsoft that needs to worry about Yahoo blazing its own path.

This deal was Microsoft's third choice. When the company evaluated the pros and cons, it evidently believed that there was an upside. But did Microsoft expect Yahoo to insist on having some creative control over the vision of the new, combined effort? It's doubtful.

The dissension between Microsoft and Yahoo must stop. If it doesn't, Google will have little to worry about when the deal becomes official.




 



 
 
 
 
Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.
 
 
 
 
 
 
 

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