Google and Microsoft are steadily squeezing Yahoo in the search engine market, according to October 2009 statistics from researcher comScore.
Google paced the market with 65.4 share, up from its 64.9 percent share in September. Microsoft Bing nearly reached double digits with 9.9 percent, up from its 9.4 percent share in September and its greatest share since September 2007, according to Broadpoint AmTech analyst Ben Schachter.
Google and Microsoft's collective gain for October came at the expense of Yahoo, which plummeted to 18 percent in October from the prior month's total of 18.8 percent. That's Yahoo's lowest share ever and its largest month-to-month share decline since August 2008.
Schachter, not given to hyperbole, wrote in a research note Nov. 16:
""We always caution investors from reading too much into any individual data point from comScore and to use it to spot trends. Well, Yahoo has ceded share in each of the last nine months, clearly a trend, and a worrisome one at that. With both Google and Microsoft taking share from Yahoo, it is difficult to pinpoint the reason for the recent share loss acceleration, but Yahoo must find a way to stabilize its share loss or all the effort spent negotiating terms of the search deal will be the least of its worries.""
Yahoo and Microsoft are banking on a blockbuster search deal that would see Bing power Yahoo's search results, enabling the two to have about 30 percent market share to challenge Google.
Microsoft would pay Yahoo 88 percent of traffic acquisition costs during the first five years of the agreement, giving the Internet company some much needed cash. That deal has yet to be finalized and is pending regulatory approval.
Yahoo is in the midst of a major turnaround under Yahoo CEO Carol Bartz, who helped the company see a slight growth in earnings for the third quarter thanks to a revitalized homepage, a $100 million ad campaign and the company's expansion in regional areas such as the Middle East. But these are clearly not stanching the traffic flow from Yahoo's search engine, which has been integrated with the homepage.
Meanwhile, while Bing may have a shot at lapping Yahoo over time, Piper Jaffray analyst Gene Munster does not see it as much of a threat to Google, even though it grew from 8.4 percent at its June launch to 9.9 percent in October. That's a high percentage for only five months and is clearly coming at the expense of Yahoo.
"Longer term we do not believe Bing will have any significant impact to Google's business, but does represent a challenge where there previously was none. We believe Google will implement a return to search innovation, which could drive expenses up, but should enable the company to maintain share," Munster said in his research note.
Munster noted other data points from the comScore metrics.
Google's total U.S. queries were up 4 percent month to month but up 17.5 percent year to year in October, the slowest year-over-year increase in queries reported by comScore since Google went public. However, Google' international query traffic was up 50 to 60 percent year over year.