Microsoft and Yahoo!, Search Engine Partners? How Mergers and Acquisitions May Change the Search Engine Playing Field - and Where Google Comes In

Until recently, there were five major players in the search engine world: Google, MSN, AOL, Ask.com, and the Yahoo! search engine. These top Internet search engines quickly could be narrowed down to four, however; AOL uses the Google algorithm and will yield nearly identical results. Further narrowing is rapidly occurring - Ask.com seems to be stepping out of the spotlight to focus on specific markets, and in early March 2008, Microsoft began attempting to purchase the Yahoo! search engine. If there are just two top search engines with which to be concerned, what does this mean for your business and for SEO as a whole?

What's Going On with the Yahoo! Search Engine?

As almost anybody with access to a news source knows by now, Microsoft put in an unsolicited offer to purchase the Yahoo! search engine in early March 2008. Yahoo! rejected this offer at first, saying that it undervalued its company as one of the top engines (and a provider of other services, including email and chat as well). Microsoft did not increase the offer at this point; it instead decided to enter a proxy battle.

A proxy battle would involve Microsoft putting up its own board of directors to let shareholders decide if its purchase of the Yahoo! search engine would be acceptable or not. In essence, Microsoft has decided that it will attempt to convince shareholders that their interests are better served by people who will approve this acquisition between two of the top Internet search engines. And Yahoo! shareholders have been beaten down for some time, so it is widely expected that the majority will in fact favor this acquisition.

Meanwhile, Yahoo!, on spurning this offer, began talking with other companies in order to build strategic partnerships and keep itself as one of the top engines, as it had been for so long. It was rumored that MySpace's parent company, News Corporation, was in talks to work with the Yahoo! search engine, as was Google. However, these talks seem to have fizzled, and Yahoo!'s board of directors has begun speaking directly with Microsoft's board. Yahoo! bought a bit of time by delaying the election of its board, but it is believed that this is all the shareholders will stand for at this point.

So I'm assuming that if the acquisition goes down, the Microsoft search engine and the Yahoo! search engine will likely be using the same algorithm, even if they remain separate sites. It just makes sense not to spend the money to have two separate research departments, especially when the Yahoo! search engine is widely regarded to be superior to Microsoft's.

Will Ask.com Continue to Be One of the Top Internet Search Engines?

For a time, Ask.com seemed to be trying to go head to head with Google and to position itself as one of the top Internet search engines - period. You may remember the "algorithm" ads that it ran for a time on television. However, recently Ask.com announced that it will instead be tailoring itself to the niche market share of which it already has control. In other words, they're no longer trying to be all things to all people in the way that other top search engines like, well, Yahoo! and Google are.

What we know about Ask.com's demographic is that it is largely female, although Ask.com refutes the notion that it is focusing on "older women." According to an article in Forbes, an Ask.com spokesperson said that:

...reports of the site becoming oriented towards older women are false and were fueled by an erroneous Associated Press article that has since been changed. Ask acknowledged that married women do compose a lot of its core users and these matronly queries are often dictionary, thesaurus, encyclopedia type queries - as well as categories like health and entertainment...[1]

Seeing as Ask.com also laid off 8% of its staff at the same time that it refocused, it seems clear that the company is no longer aiming to be considered one of the top Internet search engines.

And this means that we are down to two search engine technologies dominating the entire landscape: Google and a MSN/Yahoo! search engine hybrid (Micro-hoo? Yah-soft?).

How Will This Affect Consumers?

If there truly are only two major top Internet search engines, the industry will be like Coke vs. Pepsi. Sure there are other, smaller players like RC Cola that some people will be brand loyal about, but for the most part it's either Big Guy One or Big Guy Two.

And this means that businesses that had good rankings and that were getting good traffic from, say, Ask.com and MSN but not the Yahoo! search engine, will be in a bind. With only two top Internet search engines, there will be less real estate to compete for and the same number of businesses vying for this real estate.

How Will This Affect SEO Companies?

In one sense, having only two serious engines makes the job easier for search engine optimization companies - there's just less algorithms to absorb and master. However, it makes the opportunity for volatility much more likely. Before, if the Google or Yahoo! search engine changed its algorithm, you had three or four other engines to fall back on while you worked to update your practices. But with only two major players, a tweak to either the Google or MSN/Yahoo! search engine algorithm could have much further reaching implications to individual companies in the search space.

Who Will Compete Next?

Google has been coasting for many years as being seen as the underdog in the industry - the cool, hip engine to use that's not owned by the big guys. However, search engine optimization practitioners have started to see some cracks in that veneer. The truth of the matter is that Microsoft is seen as a huge corporate conglomerate, with Google starting to be seen similarly. And now Google has to answer to shareholders, rather than just going along trying "not to be evil." Google has its own set of privacy issues and conflicts of interest, such as its recent purchase of DoubleClick, which came along with a SEO company. [See my recent article on this topic for more information.]

So when there are just two top Internet search engines, the door is opened for competition. If another company can come along technologically that is on par with the Google and Yahoo! search engine algorithms and that does not have huge corporate considerations, it could very well start gaining some market share in this space. I'll let you know if I see any contenders.

Sources

1. http://www.forbes.com/technology/ebusiness/2008/03/05/iac-ask-update-markets-equity-cx_md_0305markets33.html