Microsoft Hopes Bing Will Power Yahoo by Late 2010

Microsoft hopes it will complete the Bing-powered takeover of Yahoo's backend search later this year, according to a Microsoft executive speaking at an investor conference June 9, although complications could delay that transition until early 2011. Those statements correspond with earlier blog postings by both companies' representatives. Microsoft and Yahoo likely hope that their 10-year search-and-advertising deal will allow them to more robustly challenge Google in the online space, where the latter continues to hold the lion's share of the search-engine market while expanding its reach in areas such as email.

Microsoft hopes to have Bing powering Yahoo's backend search by the end of 2010, according to an executive, in accordance with a 10-year search-and-advertising deal signed by the two companies last summer.

"We're hopeful to go prior to the holidays, we've publicly announced that were going to shoot for that," Bill Koefoed, Microsoft's general manager of investor relations, reportedly told the audience during a June 9 appearance at the RBC Capital markets' Technology, Media and Communications Conference. However, he cautioned, "We're clearly going to make sure we optimize for customer experience, and so there is a potential that it could flip -til after the holidays."

Microsoft and Yahoo had previously announced that they hoped to have the major aspects of the deal, which includes porting Yahoo's U.S. advertisers and publishers onto Microsoft's AdCenter platform, in place by the end-year holidays 2010. Yahoo will take over worldwide sales-force duties for both companies' search advertisers.

"The Yahoo and Microsoft teams have been working hard to design a high quality transition experience for customers," Carolyn Miller, a member of Microsoft's AdCenter Community Team, wrote in a May 6 posting on the AdCenter Blog. "We're working toward completing this transition in the U.S. and Canada before the start of the 2010 holiday season, with additional countries following on a staggered schedule beginning in 2011."

Those previous postings also sounded a note of caution that echoed Koefoed's; in a May 6 posting on its Search Marketing Blog, Yahoo indicated that the transition to AdCenter could potentially be delayed until early 2011 if unexpected problems threatened to drag the process into the holidays.

From a governmental point of view, however, the deal seems to be proceeding relatively unimpeded, with the U.S. Department of Justice and the European Commission both clearing the two companies to begin their agreement. "U.S. market participants express support for the transaction and believe that combining the parties' technology would be likely to increase competition by creating a more viable competitive alternative to Google," read a Feb. 18 statement from the Justice Department. "Most customers view Google as posing the most significant competitive constraint on both Microsoft and Yahoo, and the competitive focus of both Microsoft and Yahoo is predominantly on Google and not on each other."

Even with their forces somewhat combined, both Yahoo and Microsoft face a decidedly uphill battle when it comes to threatening Google's search-engine market share in a meaningful way. According to analysis firm comScore, Yahoo saw its share of the search-engine market rise to 17.7 percent in April, while Bing reached 11.8 percent; by contrast, Google enjoys the lion's share of searches, at 64.4 percent of the market. Microsoft likely hopes that, with the completion of its deal, Yahoo's market-share will port over to Bing with relatively little attrition.