It's easy to peg Yahoo as the big loser after Google secures a massive deal--the $900 million search distribution agreement between the search giant and News Corp.'s MySpace. After the news broke,
analysts were singing Google's praises, pronouncing a major win against competitors Yahoo and MSN. Clearly, Google is the winner of that deal. But, lest we forget, Yahoo is only part-search engine,
whereas Google is 90 percent search engine (certainly revenue-wise). Which reminds us that in many ways, Yahoo competes with MySpace for eyeballs and content; it's also moving into areas like social
networking and online video. Google offers portal-like services, including online video, but it's almost singularly focused on growing its search revenue. Yahoo's slightly broader focus keeps it from
being a zero-sum game when it competes with Google for partners. Yahoo can take the hit and still continue to grow. Given that search is more or less a zero-sum game to Google, it was a bigger deal
for the Mountain View, Calif. company to secure the MySpace partnership. Meanwhile, Yahoo is publicly dismissing the loss as unimportant: "We did not see this opportunity as financially prudent or in
the best interest of our advertisers," says spokeswoman Joanna Stevens. However, Paul Keung, a CIBC World Markets analyst, says if Yahoo isn't careful, it could end up with the same problems
traditional media companies face: stagnant growth and fighting to keep its users. That threat is real. Yahoo only reported a 2 percent uptick in unique users this quarter.
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