The Yahoo-Microsoft Bing deal could be under threat as Yahoo admits the self-proposed deadline hasn’t given them enough time. The deal is now on hold, with no concrete date as yet being given for completion.
The search deal was announced by the companies in July, with investors being promised that everything would be finalised by 27 October. Now Yahoo has told the Security and Exchange Commission in America that more time is needed for the details to be finalised.
Microsoft and Yahoo – the deal
The ten-year deal between Microsoft and Yahoo was announced in July this year and saw the agreement of Microsoft’s Bing to power Yahoo’s search, while Yahoo would concentrate on being the sales force for the collaboration’s combined advertisers and maintain their own user interface.
Bing would be Yahoo’s exclusive algorithmic search as well as paid search platform, and Yahoo would concentrate its expertise elsewhere, such as developing technology for display advertising.
It was decided that this combination exploited both companies’ best strengths; Yahoo had long been losing market share to search dominator Google, but nevertheless had a solid relationship with search advertisers, and Microsoft had excellent search technology and investment in Bing.
Why the delay?
There has been much speculation as to whether the sudden delay signals that the deal itself is in jeopardy. This is unclear, as the only information provided from both Microsoft and Yahoo points to the reason being that there are simply more details to be ironed out than previously estimated. Microsoft has, however, indicated that it expects the deal to close in early 2010.
Speculation from the industry on the delay has led some to point to the problems of obtaining regulatory approval. Once Microsoft and Yahoo have the regulatory approval for the deal in America, they then need to obtain approval from the European regulators also, and this can take a while.
What does the delay mean?
If the deal is simply on hold due to a few red tape issues, it means little in terms of affecting the success of the merger. However, if the deal between Microsoft and Yahoo were to collapse altogether, although both companies would feel the damage, for Yahoo it would be all the more painful.
Microsoft would lose out in terms of not having access to Yahoo’s comprehensive reach. But Bing is gradually increasing its search market share, which last grew to 8.2 per cent in the natural search American market. Yahoo however shrank slightly to 11.1 per cent of search market share, while Google showed minor increase but maintained search domination with over 70 per cent of search market share. These figures from a leading search agency show that Yahoo is losing share but, crucially, it’s losing it to Bing.
Speculation in the industry also points at Microsoft’s long-term plans including acquiring lesser search company ask.com in its quest for increased market share.
Many of Yahoo’s best search people have gone to Microsoft, and the company would find a quick recovery tricky in the short term should the deal collapse.
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