So last week, Microsoft and Yahoo teamed up and, with their powers combined, swung the boom hammer at Google. Microsoft and Yahoo announced a partnership where Micrsoft’s new Bing will power the search engine function on Yahoo’s sites. Yahoo, on the other hand, will continue to provide its content and portals, and will manage all ad sales involving searches. It’s a smack of epic proportions. But can this partnership work?? For Yahoo: Yes. For Microsoft: ???    

But let’s get this out of the way now, Yahoo’s the BIG winner here. I almost laughed as I watched Yahoo trade down after the partnership was announced earlier this week. Don’t be confused here – Yahoo has literall nothing to lose in this agreement. Their search engine currently is a very distant second to Google’s, and several people I’ve talked to were confident Bing would overtake Yahoo for the #2 engine by the end of 2010.

So Yahoo swept away the hot new search engine and added it to its ridiculously fast growing (and intensely loyal) user base. Y-Mail has topped 250 million users and Yahoo Messenger has 90 million users – not even close to Google’s Chat and Mail numbers; but we know people aren’t necessarily loyal to Google. Have you ever met a Yahoo user not loyal? Didn’t think so. The point is this: Yahoo is safe. All of these stories (like this one, this one, and this one) are bogus media-driven-premature-pushing-of-panic-buttons that are quite lop-sided. The real risk lies in the Empire’s court. That’s right – Microsoft has put a lot on the line with this merger.

We Invented Something Cool! Here, You Can Have It.
It’s amusing to see that Microsoft invented an engine – it spent years reinventing and tweaking, and then essentially handed it over to Yahoo for its sites. Now, as many would rightly point out, Bing will get a huge insta-boost of searches once it shows up on Yahoo’s sites. But what they’re not telling you is that Bing is catching on. Several reviews (like this one, this one, and this one) place Bing over Google. And many analysts thought Bing would actually tear into Yahoo’s search #’s . . . not Google’s. So why go with Yahoo now? The attempted hostile takeover last year made sense then. But now? We can’t say time will tell if Microsoft made the right move, because we’ll really know. What we do know is that there was a chance for Bing, completely on its own, to compete with Google. So much for that.

You Want to Handle All of our Ad Sales? Sure! Why not?!
This one’s befuddling to me, and reasserts my point that it is Microsoft, not Yahoo, who’s being risky here. Why would you create a new engine, generate a bunch of hype and then hand over the ad sales to another company? Granted, it’s not like Microsoft is outsourcing their sales to an ad revenue company somewhere — this is Yahoo!, by the way — but again, Bing is clearly the hot, climbing engine right now — and they’re putting the potential fruits of their labor in the hands of another company!

To put this in more common terms, think of it this way: You’re a farmer who has been growing your own crops and then harvesting them yourself for years now. You’re an expert crop-grower, and you’re an expert harvester. Now, you’ve expanded your land, invested in tons of better fertilizer, and you’re now looking at by far the best season you’ve ever had. So along comes a competing farmer. They see how good you’re doing, and they offer you more land to plant your crops on in exchange for them harvesting your entire crop for you . . . and taking some skin out of it . . . all for land you may not have needed to put their crop out of business. Would this make sense to you? Apparently, it made sense to Microsoft. Hmmmmm . . .

I’m Bing. But Wait, Now I’m Ninja-Bing Slipped Under Yahoo. Call me Bingoo!
Not since Jeeves has a search engine suddenly faced such an identity crisis. What will become of Bing? Where is the user supposed to go to look something up: Yahoo or Bing? What differences will there be? While most Internet savvy people either know the answers to these questions (or simply don’t care), there’s about to be a lot of brand confusion. (For more on brand confusion: See GM.) I’ve yet to see an answer for this one, and we’ll just have to wait and see how it all unfolds.

Bottom Line:

Really, my whole beef about this thing is that Yahoo is taking flack for this deal, when really – they have very little to lose. If you count the sick-nasty investment Microsoft probably made to create Bing, then you can see that suddenly teaming with Yahoo is downgrading the potency of your brand. Sure, Live Search needed Yahoo, but did Bing? We’ll never know the answer to that one . . .

One answer we will know though is whether this was the right move; but we’ll probably know it later, rather than sooner.