The Wall Street Journal is reporting that Yahoo is considering selling its search advertising business to Microsoft.
Microsoft Watch's Joe Wilcox couldn't have been more on point when he said this proposal indicates that Microsoft executives perhaps think Yahoo CEO Jerry Yang and his crew, who successfully staved off Microsoft's first bid, are stupid and desperate.
Search is the crown jewel for Yahoo, as Wilcox noted.
This is so true that Yahoo has made search--the effort is called SearchMonkey--the first leg of its YOS (Yahoo Open Strategy).
This is a turnaround plan to "rewire" the company's software infrastructure to create valuable social services that will not only retain the company's 500 million-plus users, but poach users from Google and Microsoft, or at least get them to split time.
Yahoo May 15 formally launched SearchMonkey, a bid to open up its search platform to let third-party programmers write widgets that will augment that search engine functionality. Users grab the widgets they want to customize their search.
So, while you stare at blue links and some pictures on Google and Microsoft Live Search, Yahoo will present restaurant listings with pictures, reviews, user ratings, directions and other useful tidbits directly in a toolbar on the page.
Such more inclusive search makes it easier for users to make decisions about what they want to do when they find something. The hope is that SearchMonkey will help increase audience reach, traffic, advertising inventory and advertising revenue growth.
And Yahoo is going to create that--the first step in a three-pronged strategy to improve the company's fortunes--only to sell it to Microsoft?
eWEEK doesn't think so. SearchMonkey cements the fact that Yahoo intends to compete heartily going forward, even if Google has it beat in search by 40 percent or something ridiculous like that.
On the flip side, Microsoft could very well see SearchMonkey as the potentially bleeding-edge strategy change that it is.
Perhaps this is why the software giant, which is desperate to do something to catch Google in search advertising, is allegedly willing to accept just that key component of Yahoo's business. Microsoft may believe it needs Yahoo Search as we now know it to make up some ground versus Google, but if SearchMonkey pans out, it could help close the gap versus Google.
As IDC analyst Karsten Weide noted: "IDC believes Yahoo OS, if it became reality, could help the company to become a viable competitor for Google once again in the long term."