Microhoo Deal Could Shortchange Consumers, Marketers
Microsoft has wanted to gain a larger presence in the search market for years. Now it looks like the company has done so, assuming its proposed deal with Yahoo is cleared by regulators.
The pact, announced this week, calls for Microsoft to power search for Yahoo while Yahoo will sell search ads for Microsoft. Together, Microsoft-Yahoo could account for almost one-third of the search market -- assuming Google continues to account for around 65%.
Some marketers have predicted this deal will benefit them, on the theory that Yahoo and Microsoft together will pose more of a threat to Google than either company separately. But no one has articulated a convincing reason for why a Yahoo-Microsoft combo will draw more searchers than each company does separately.
While the deal could make it easier to manage campaigns -- advertisers will only have to make buys on two major search engines instead of three -- it's not clear that any extra efficiency will translate to lower ad prices. Ads are already sold at auction, which limits the ability of Google -- or any other search engine -- to set prices.
In fact, in some ways this deal could be worse for competition than the Google-Yahoo arrangement shot down last year. That doomed pact called for Google to power some portion of paid search ads for Yahoo, but Yahoo would have continued to develop its algorithms for organic search results.
Additionally, the Microsoft-Yahoo arrangement could leave some Web sites that depend on organic traffic in a precarious position. Currently, if a company falls out of Google's organic results -- as famously happened with KinderStart -- the company still can reach a significant numbers of searchers through Microsoft and Yahoo. But in the future, there will only be one other realistic alternative: Bing.
For Web users as well, search engines serve as a gateway. It's hard to see how consumers will benefit by having fewer options to access information online.