Google Needs to Diversify, Says Yahoo's Bartz

Google needs to expand beyond its base in search, Yahoo CEO Carol Bartz reportedly said during an interview with BBC News. Although Yahoo signed a 10-year search-and-advertising deal with Microsoft that will see Bing power the Web company's back-end search processes, Yahoo executives have insisted that the company remains viable thanks to its end-user services. Recent surveys indicate that Yahoo occupies a position in the U.S. search market well behind Google and slightly ahead of Bing, although a recent $100 million search campaign seems to have had a negligible effect on reversing Yahoo's market-share erosion.

Yahoo CEO Carol Bartz insisted during an interview with BBC News that Google, its erstwhile competitor, could face serious issues in the future.

"Google is going to have a problem because Google is only known for search ... it is only half our business; it's 99.9 [percent] of their business," Bartz reportedly told the news service April 29. "Google has to grow a company the size of Yahoo every year to be interesting.

"They've got to find other things to do," Bartz added, according to the BBC.

Yahoo continues to occupy a middle position in the U.S. search market, with analysis firm ComScore reporting that the company had a 16.89 percent share in March, between Google with 65.1 percent and Bing with 11.7 percent. However, ComScore also estimated Yahoo's growth between February and March at 0.08 percent, following 13 consecutive months of declines. That suggests that Yahoo's $100 million advertising push, begun in September 2009, only had a negligible effect on its fortunes.

Yahoo signed a 10-year search-and-advertising deal with Microsoft in July 2009 that will see Bing power Yahoo's back-end search process in exchange for Yahoo managing the two companies' worldwide search-advertising sales force. Despite Bing taking over Yahoo's search market share, Yahoo executives have spent the past several months insisting that Yahoo will continue to be a robust force on the Web by virtue of its end-user services; to augment that argument, those executives rolled out several new features for its core properties during an August 2009 press conference, including Yahoo Mail and Yahoo Messenger.

"Background search is much like an Intel chip," Bartz told an audience of assembled media during a September event at NASDAQ MarketSite in Times Square. "Thank God they've done their R&D and gotten it out into the world; but the experience that Dell wraps around their chips and HP wraps around those chips is different."

Yahoo also announced an agreement with Samsung April 26 that will see its services, including Yahoo Mail and Yahoo Contacts and Calendar, preloaded onto the manufacturer's smartphones starting in May. Yahoo's other deals with mobile companies include AT&T, whose Android-running Motorola Backflip will use Yahoo as its default search provider.

As to be expected, Bartz has insisted that such deals, combined with new features for its properties, will allow Yahoo to be resurrected to a position of market strength, a process that could take some time: "I know people want to see magic things happen. ... The magic things happening are deep inside our little system here."