Ganging up on Google

After a year-and-a-half courtship, Microsoft and Yahoo announced today a deal that calls for a Bing-powered Yahoo. In a joint statement, the two companies said they’ll join forces so that “advertisers no longer have to rely on one company that dominates more than 70% of all search.” (CNNMoney.com pegs it at 65%)

Here’s the 10-year deal (which has yet to clear possible regulator hurdles): Microsoft will fork over to Yahoo 88% of revenue gained from searches on Yahoo sites, while Microsoft gets to use Yahoo search technology in its own search platforms.

Microsoft chief exec Steve Ballmer said the deal allows the software company to “create more innovation in search, better value for advertisers and real consumer choice in a market currently dominated by a single company.”

Yahoo chief exec Carol Bartz said she looks forward to her company’s increased focus on its strengths, citing producing niche media sites, marketing and on-line display ads.

Read Write Web thinks, “Bing is a worthy competitor to Google’s search engine, which both Microsoft and Yahoo try not to mention in all their press materials, but whose shadow obviously looms large over this deal. Advertisers aren’t likely to spend a lot of money on a search engine that only commands less than 10% of the market, but once combined with Yahoo Search, Bing could easily reach 20% or more. At this point, advertising on Bing becomes far more interesting.”

This morning on Wall Street, Yahoo shares dropped 11% while Microsoft’s remained flat, reports TechCrunch.

Yahoo and Microsoft begin their honeymoon period with a combined 28% of U.S. search traffic.

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