One of the most famous phases of Microsoft’s 30 year history came in 2007 with a series of attempts by then CEO Steve Ballmer to acquire Yahoo, with a roller coaster ride ending in a failed $45 billion bid for the company, although Ballmer recalled some years later that “sometimes, you get lucky.”
Fast forward to today, with Verizon confirming that it has agreed to a $4.83 billion bid for most of Yahoo, leaving just a shell of the former internet portal kingpin (although with significant assets in the form of Alibaba and Yahoo Japan stock). Along with the name and most of Yahoo’s technology, Verizon will acquire the last vestiges of a deal between Yahoo and Bing, first formed in 2009 as a 10 year agreement beginning in 2010, and then amended in 2015 to drop the required use of Bing results in Yahoo searches from 100% to 51%, and to allow Yahoo to kill the deal altogether “at will” anytime after October 2015.
So far that hasn’t happened, but Yahoo will still have a year before the Verizon deal closes, but even then and even if the Bing-Yahoo deal stands, it is only slated to continue for three more years.
Microsoft made some good use out of the deal, building market share and gaining a critical mass of searches, but it has since effectively pivoted Bing to become more of a search arm for Windows 10; built into Cortana, search indexing, Office 365, and more. It’s arguably much less of a burden for Microsoft to lose the Yahoo portion of its searches now than it was when the deal, called the Bing Yahoo Search Alliance, was first realized. Ars Technica’s Peter Bright summed up Bing’s advances in reporting Microsoft’s recent 4th quarter earnings:
Bing, however, was profitable for the full year, and in the fourth quarter its revenue was up 54 percent (or up 16 percent with traffic acquisition costs included) from a combination of both more searches and more revenue per search. Windows 10’s greater use and embedding of Bing was instrumental here, with more than 40 percent of Bing searches in June coming from Windows 10 devices.
Will Microsoft continue to pursue a search alliance with a Verizon owned Yahoo? We asked Microsoft for comment, getting back only a “we are unable to accommodate your request at this time,” and not much has been said about the future of the deal by either Yahoo or Verizon, although details of the blockbuster almost $5 billion deal are just beginning to filter out.
Will Microsoft suffer if Verizon/Yahoo kills the last few years of the Bing/Yahoo Search Alliance? Is Bing sufficiently entrenched that it won’t much matter? What do you think should happen between Microsoft and Verizon?Further reading: Bing, Microsoft, Verizon, Yahoo